Aristides Pittas
Analyst · NOBLE Capital Partners
Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our CFO, who will discuss in detail our financial results later. Please turn to Slide 3 of the presentation for our financial highlights. For the first quarter of 2026, we reported total net revenues of $55.84 million and net income of $32.52 million or $4.65 per diluted share. Adjusted net income for the quarter was $32.87 million or $4.70 per diluted share. Adjusted EBITDA was close to $41 million. Please refer to our press release for the reconciliation of adjusted net income and adjusted EBITDA to net income. Tasos will walk you through the results, as I said earlier, in more detail. Consistent with our commitment to enhance shareholder returns, our Board of Directors approved a quarterly dividend of $0.80 per share for the first quarter of 2026, representing a 6.7% increase from the $0.75 per share that we paid for the fourth quarter of 2025. The dividend will be payable on or about June 16 to shareholders of record on June 9. Based on our current share price, this translates to an annualized dividend yield of close to 5%. On the buyback front, since the launch of our $20 million share repurchase program in May 2022, we have repurchased 480,500 shares in the open market, representing about 6.8% of our outstanding shares for an aggregate consideration of approximately $11.4 million. The program was renewed for fourth consecutive year in May 2026, and we intend to continue executing it in a disciplined and opportunistic manner, deploying capital prudently to support long-term shareholder value. Finally, we recently entered into a joint venture with NRP Project Finance and related investors for the ownership of our third intermediate containership on [ order ] Motor/Vessel Thrylos. The vessel is scheduled to be delivered in Q1 2028 and will be financed with at least 60% debt. Under the terms of the agreement, NRP investors will acquire a 49% stake for approximately $12.2 million, including the transaction cost. Please turn to Slide 4 for an overview of our recent developments, covering key activities across vessel sale acquisitions, chartering and fleet operations. On the S&P front, we continue to expand our newbuilding program with 2 strategically aligned orders that further strengthen our fleet profile and long-term growth trajectory. First, as already announced, we signed an agreement with Huanghai Shipbuilding Company in China for the construction of 2 additional methanol-ready 2,800 TEU container ships with scheduled deliveries in November '28 and February '29. These are sister ships to the vessels already ordered in March 2026, bringing the series to 4 units in total. The aggregate consideration is approximately $93 million and will be financed through equity and debt. We are targeting approximately 60% to 65% leverage. Second, we entered into agreement with Nantong CIMC Sinopacific Offshore & Engineering in China for the construction of two 1,800 TEU reefer container ships with expected deliveries in June 2028 and September 2028. Total consideration for these vessels is approximately $64.5 million and will be financed on a similarly structured basis with equity and debt. On the chartering side, we secured multiyear employment for 2 of our vessels, further strengthening our revenue stability. Motor Vessel EM Kea was fixed for 36 to 38 months at a rate of $30,000 per day and Motor/Vessel EM Spetses for 22 to 24 months at $21,500 per day. I am pleased to report that we had no idle or commercial off-hire days this period. Now please turn to Slide 5. Our operating fleet currently consists of 21 vessels with a combined carrying capacity of approximately 61,000 TEUs and an average age of about 13 years. This comprises the 6 intermediate containerships with a carrying capacity of approximately 25,000 TEUs and an average age of 18 years, alongside 15 feeder containerships with a combined carrying capacity of 35,000 TEUs and an average age just below 10 years. In addition, we have the 10 newbuilding vessels on order ranging in size from 1,780 TEU to 4,480 TEU with expected deliveries between the third quarter of 2027 and the first quarter of 2029. Upon full delivery of our newbuilding program, our fleet will grow to 31 vessels with a total carrying capacity of approximately 94,000 TEUs. Please turn to Slide 6 for a further update of our fleet employment and forward coverage, which continues to underpin strong revenue visibility across our operating fleet. For 2026, approximately 96% of available voyage days have been secured at an average daily rate of approximately $30,150. Looking ahead to 2027, we have already covered 86% of our available voyage days at an average rate of approximately $31,000 per day. For 2028, approximately half of our available voyage days are covered at an average rate of approximately $31,500 per day. This strong forward coverage is the result of our disciplined cycle-aware chartering strategy, which is designed to effectively balance market exposure with earnings stability. Importantly, it provides meaningful cash flow visibility and supports our ability to sustain profitability across different market conditions, including periods of market softness or sudden market correction. Moving on to Slide 8. Let's walk through the key market developments that shaped the containership sector over the first quarter of 2028 (sic) [ 2026 ]. One-year time charter rates held firm at elevated levels, supported in the near term by a substantial portion of the fleet being fixed forward as liner operators continued to lock in tonnage to navigate lingering supply chain disruptions and network imbalances. On the freight side, conditions were more volatile with an overall Shanghai Containerized Freight Index rebounding by approximately 75% of its late-September trough, which has represented a near 2-year low and has since been closing in on early June peak, though it still remains about 13% below that. Turning to asset values. Secondhand asset prices edged higher by about 2% quarter-over-quarter, remaining at elevated levels despite the backdrop of persistent geopolitical uncertainties. The underlying drivers remain intact, structurally constrained supply of available vessels and intense competition for prompt charter-free tonnage continue to provide a strong floor for asset prices. On the newbuilding side, the price index was essentially flat relative to the prior quarter, with robust appetite across both feeder and larger vessel classes helping to sustain pricing even as absolute cost levels remain quite elevated by historical standards. Fleet utilization continues to reflect a tight market. Idle fleet capacity, excluding vessels under repair, stood at just 240,000 TEU or 0.7% of the global fleet as of early May. This figure remains close to historic lows and is a clear indicator of the supply tightness that has characterized this market cycle. Finally, recycling activity has remained notably muted thus far in 2026 with only 5 vessels totaling approximately 9,000 TEU sent to scrap year-to-date. Scrap prices in Bangladesh have softened to approximately $470 per lightweight ton as of May 15, 2026. Meanwhile, the global container fleet has expanded by approximately 1.3% year-to-date. Please turn to Slide 9, which depicts the development of 6 to 12 months time charter rates over the past 10 years. Across the board, from the smaller feeders through to the bigger intermediate container segment, current charter rates remain notably above both their respective 10-year historical averages and median levels. These smaller vessel classes remain essential in maintaining network flexibility and supporting regional and intra-regional trade flows, a role that has only grown in importance amid the ongoing geopolitical uncertainties and supply chain alignment. With scarce availability tonnage and underlying demand holding firm, the conditions that have sustained elevated time charter rates appear to remain broadly intact for now. Let's go to Slide 10. This slide sets the macroeconomic backdrop, drawing on the IMF April 2026 World Economic Outlook update as well as Clarksons latest trade estimates for containers. The IMF projects global growth to moderate to 3.1% in 2026 from 3.3% previously and 3.2% in 2027 with more risks on the downside. Key risks include the broadening of the Middle East conflict, the disruptive effects of shifting trade policy and lingering inflationary pressures tied to commodity supply stocks. Global headline inflation is projected to rise modestly in 2026 before resuming to gradual decline in 2027, with the impact likely to be most pronounced in emerging markets and developing economies. In the United States, the 2026 growth forecast was revised slightly lower to 2.3%, though the 2027 outlook was revised slightly upwards to 2.1%, reflecting continued underlying resilience despite macroeconomic imbalances. Monetary policy remains key as the Federal Reserve is in a holding pattern, while rate cuts have been put on pause, pending further evidence of easing inflation. The effective Fed funds rate stands at approximately 3.64% within a target range of 3.5% and 3.75%, and expectations that the Federal Reserve could begin cutting rates again from late 2026. Against this backdrop, a gradual depreciation of the U.S. dollar is anticipated as monetary policy begins to ease. In Asia, the ASEAN-5 region is projected to grow at around 4.1% in 2026 and 4.4% in 2027, though external headwinds, including energy market volatility, geopolitical trade fragmentation and fading export momentum are expected to weigh on near-term performance. Meanwhile, China's growth trajectory is projected to remain relatively resilient with GDP growth of 4.4% in 2026 and 4% in 2027, supported in part by the country's technological and industrial competitiveness. That said, structural economic imbalances persist and policy remains firmly oriented towards high-quality growth with priorities on energy security, domestic demand consumption and productivity gains through innovation. On trade, Clarksons estimates containerized trade growth measured in TEU miles of approximately 1.1% in 2026 before contracting sharply to a negative 6.6% in 2027. This significant reversal assumes a complete normalization of global trade flows. Therefore, ongoing geopolitical uncertainty, shifting trade policies and potential unwinding of supply chain complexity are the main factors that will weigh on trade growth over the medium term. Turning on to Slide 11. We provide an overview of the total fleet age profile and containership order book. Starting with the age profile in the upper left, the overall containership fleet remains relatively young with the majority of vessels under 15 years of age and only about 14% of the fleet over 20 years old. However, this aggregate view is totally different when examining the feeder and intermediate segments in isolation, which we will explore in greater detail over the next several slides. Turning to vessel deliveries. The top right chart illustrates scheduled new deliveries as a percentage of the existing fleet. Deliveries are projected at approximately 5.2% for 2026, 8.9% for 2027 and 20.2% for 2028 onwards, although actual fleet growth is expected to be somewhat lower due to slippage and future demolition activity. The bottom chart puts the current order book in historical context. At approximately 37.7% of the fleet as of May 2026, the order book has climbed to levels not seen in over 15 years, a development that warrants close attention as we think about the medium-term supply outlook for the sector. Turning on to Slide 12. We zoom in on the 1,000 to 3,000 TEU range, the feeder segment that forms the core of our fleet. The supply picture here tells us a completely different story from the broader market. The age profile here is striking. Approximately 28% of the fleet is over 20 years old with a further 25% in the 15 to 19 years age bracket, meaning that more than half of the feeder fleet is approaching scrap age. As environmental regulations continue to tighten and compliance costs increase, a meaningful portion of this older tonnage is likely to exit the fleet over the coming years. Against this aging fleet, new building activity in the sub-3,000 TEU segment remains decidedly restrained. As of May 2026, the order book stands at 14% of the fleet, a fraction of the 37.7% we saw in the previous slide, and scheduled deliveries are projected at 2.6% for 2026, 5.5% for 2027 and 5.8% for 2028 and beyond. Let's move to Slide 13 now to focus on the intermediate segment, the other core segment of our fleet. As of May 2026, the order book in this segment stands at approximately 21% of the existing fleet. While that figure is higher than what we saw in the feeder segment, it remains comparatively modest relative to the larger mainline vessel classes where newbuilding activity has been considerably more pronounced. What makes this segment particularly compelling from a supply perspective is the age profile. Approximately 29% of vessels in this size range are over 20 years of age with a further 38% falling between the 15- to 19-year bracket. This means roughly 2/3 of the fleet is either at or approaching an age where retirement decisions become likely, especially as environmental compliance requirements become increasingly stringent and costly, like we've mentioned numerous times. Scheduled deliveries are projected at 3.7% of the fleet in 2026, rising to approximately 5.6% in 2027 and around 9.7% for 2028 and beyond. However, when weighed against the potential for accelerated scrapping among the older segments, net fleet growth in this segment is expected to remain contained over the coming years. The interplay between a maturing fleet and a measured newbuilding pipeline continues to underpin a structurally supportive environment for intermediate containership operators. Moving on to Slide 14. This chart places the dynamics we presented in a broader context across the entire containership sector. What becomes particularly evident is the pronounced concentration of newbuilding activity in the larger vessel classes. Neo-Panamax and Post-Panamax segments currently carry order books ranging from approximately 39% to 89% of their existing fleet, reflecting the significant capacity additions targeted towards major mainline trades. These are the vessel classes where oversupply concerns are most acute. By contrast, the feeder and intermediate segments exhibit significantly lower order book activity, ranging from approximately 12% to 21% of the existing fleet, depending on vessel size, as said before. The modest ordering activity is occurring against a backdrop of fleet that is aging rapidly. This widening gap between the wave of newbuilding activity in larger vessel classes and comparatively limited fleet renewal in the feeder and intermediate segments points to a structurally more favorable supply outlook for the sizes in which Euroseas operates. With a significant portion of the existing fleet approaching replacement age, net fleet growth in these segments is likely to remain constrained. This dynamic underpins our conviction that Euroseas fleet is positioned in segments where the supply outlook remains genuinely supportive with hopefully limited risk of oversupply on the horizon. Now please turn to Slide 15. This slide brings together the key themes shaping the container sector outlook. Near-term sentiment has been bolstered by escalating Middle East tensions, which have driven time charter rates to a new post-COVID highs and pushed freight rates higher as liner companies scramble to secure tonnage amid ongoing supply chain disruptions. Container shipping sentiment was strong throughout the quarter and even strengthened in April. Overall, for 2026, fleet growth is expected to be among the lowest in recent years, supporting a more balanced supply-demand environment. The slower-than-anticipated normalization of Red Sea routing continues to provide additional near-term buffer. The 2027 picture, though, is more challenging. A historically large wave of newbuild deliveries, particularly during the second half of the year is set to test the market. Capacity management and accelerated scrapping may help offset some of the pressure, but the potential for a more difficult market environment is real. The geopolitical and macroeconomic variables in play, however, make forecasting particularly difficult. At the same time, concerns around tariffs appear to have moderated with the impact on container shipping to date proving more limited than initially anticipated. Finally, on energy transition, while there is a clear industry shift towards alternative fuels and lower emission technologies, the pace of adoption is likely to be slower than anticipated given the U.S. stance, technical and economic hurdles and delays in finalizing the IMO's net-zero framework. Let's turn now to my last slide, Slide 16. The left chart shows the cycle of the 1-year time charter rate for 2,500 TEU containerships over the past decade. As of May 15, the 1-year time charter rate stands at $37,000 per day, comfortably above both the 10-year historical average of around $23,500 and the median of close to $15,000 per day. This firm rate environment is mirrored in asset values as well. The right chart shows newbuilding vessels are now valued at approximately $44 million, meaningfully above the 10-year median and average of $36 million. Secondhand values are even more striking in relative terms. The 10-year-old vessel is currently valued at about $40 million compared to a 10-year historical average of around $22 million and a median of $15 million. Given the current elevated secondhand asset values, we believe acquiring vessels, especially without attached employment, offers a less compelling risk reward profile at this stage of the cycle. Newbuilding, by contrast, presents a more attractive avenue for fleet investment with pricing that's comparatively less volatile and that allows us to lock in costs with greater predictability. With that conviction, we have expanded our newbuilding program by adding 4 new shipbuilding contracts, bringing our total order book to 10 vessels, as already mentioned. This builds directly on the 9 vessel newbuilding programs we successfully completed in early 2025 and reflects our continued confidence in the long-term outlook for the feeder and intermediate segments. Upon delivery of all 10 vessels, Euroseas will operate one of the youngest and most modern feeder and intermediate containership fleets among our peer group. A competitive advantage we expect to translate into stronger commercial positioning, lower operating costs and enhanced environmental compliance for years to come. In addition, we still maintain a very strong balance sheet and the high liquidity availability provides us with the means to jump on, on any other interesting investment opportunity that may appear. With that, I'll turn the call over to Tasos Aslidis to take you through the financial results for the first quarter of 2026. Tasos, please go ahead.
