Euroholdings Ltd. Common Stock 2026 Q2 Earnings Call

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 Tasos Aslidis, our Chief Strategy Officer and Treasurer. The purpose of today's call is to discuss our financial results for the three and six-month period ended June 30, 2026. Let's turn to slide 3. We remind our listeners that Euroholdings was spun off from Euroseas on March 17, 2025, and began trading on the Nasdaq under the symbol EHLD the following day. We started off with two debt-free container vessels, the MV Aegean Express and MV Joanna, along with $14 million in cash. Euroseas shareholders received one Euroholdings share for every 2.5 shares they held. Since our listing, performance has been strong.

While our share price averaged below $7 during our first year of trading, it has traded consistently above $8 since mid-April 2026, frequently reaching approximately $8.50 throughout this last quarter. We've returned capital to shareholders through all five quarters with dividends of $0.14 per share, and we've now declared our sixth consecutive dividend at the same level. On June 23, 2025, Marla Investments Inc., affiliated with the Latsis family, acquired a 51% stake from the Pittas family, becoming our major shareholder. My family retains approximately 8% ownership. In August 2025, we announced our strategic decision to focus on the tanker sector. We successfully acquired our first medium-range product tanker, the Hellas Avatar, in November 2025. We also agreed to acquire a sister vessel, the Hellas Fighter, which is expected to be delivered by September 2026.

Going forward, we will continue operating our two legacy feeder container ships throughout their useful commercial life, while we gradually transition to a tanker-focused operating model. Please turn to slide 4 of the presentation, which presents our main financial highlights during the second quarter of 2026. Tassos will go through these in more detail in the second half of the presentation. For the second quarter of 2026, we reported total net revenues of $8.6 million and a net income of $4.29 million, or $1.52 earnings per basic and diluted share. Adjusted EBITDA for the quarter amounted to $5.04 million. Please refer to the press release for a reconciliation between net income and adjusted EBITDA. As mentioned earlier, our board declared the sixth consecutive quarterly dividend, which represents an annualized yield of approximately 6.7% based on recent trading levels. Please turn to slide 5 for an overview of our fleet.

After the delivery of the Hellas Fighter, our fleet will comprise of two containers and two product tankers with a combined carrying capacity of about 141,000 deadweight tons. Our containership segment consists of our two feeder containerships with a combined carrying capacity of 3,171 TEU and an average age of approximately 28 years. Our product tanker segment will be represented by the two MR tankers, which are built in 2016, with a carrying capacity of about 100,000 deadweight tons and average age of approximately 11 years. Let's turn to slide 6. Our two feeder containerships remain fully employed under profitable time charters, generating stable cash flows that support our growth initiatives. Both vessels are employed through November 2026, but we are already discussing possibly chartering them for an additional one to two years at an improved rate.

Turning to our tanker fleet, mototanker Hellas Avatar is employed in the spot market, giving us the flexibility to capitalize on current market conditions. We are actively pursuing follow-on employment for the vessel and remain confident we can secure attractive charter rates. While the MR tanker rates have moderated from early this year, they still remain above long-term averages. Similarly, we plan to employ the Hellas Fighter on the spot market too, once we get delivery of her. Please turn to slide 7, which displays six to 12 month time charter rates for 1,700 TEU gate feed container ships over the past decade. As of August 7, the prevailing market rate stands at approximately $31,750 per day, well above the 10-year average of approximately $18,500 per day, and nearly three times the 10-year median of $11,720 per day. This underscores the exceptional strength of the current charter market.

Our strategy to charter these vessels rather than sell them or scrap them is well supported by this market dynamic. Despite the age of our containerships, we are confident that we will secure profitable employment at levels well above historical norms. I will now continue with an overview of the product tanker market. Please turn to slide 9, which illustrates MR tanker time charter rates for both one and three-year terms. On the one-year side, current rates stand at $29,000 per day, above the five-year average of about $26,000, and the five-year median of $27,500. For three-year charters, rates are at $23,500 per day, above the five-year average of $22,000 per day, and in line with the five-year median of $23,260 per day. Moving on to slide 10, we can see the development of new building and secondhand values.

Secondhand asset values have historically, obviously, responded more directly to changes in freight market conditions, as it depends primarily on ships in demand supply conditions. On the other hand, new building prices depend significantly also on other structural factors as ship capacity, input cost inflation, and labor availability and cost. With shipbuilding costs rising significantly over the last few years, secondhand prices are finding a higher level as well. As of August 7, MR new building prices stood at $52 million per day compared to five-year secondhand values of $48 million per day. $48 million, sorry, and 10-year secondhand values of $38 million. These valuations reflect the current strength of the market and provide confidence in our asset base. Let's now move into slide 11, which examines the MR tanker fleet age profile and order book.

The global MR fleet exhibits a relatively old age profile, with approximately 47% of the fleet over 15 years of age, while only about 15% of the fleet is less than five years old. This aging fleet will require increasing replacement over the medium term, as more vessels are approaching special surveys and facing higher maintenance and regulatory compliance costs. These dynamics underscore the need for continued fleet renewal across the sector. Looking at the scheduled deliveries for 2026, these are projected to be lower than in 2025, indicating a moderating pace of fleet additions. At the same time, the MR order book currently stands at approximately 16.5% of the existing fleet, well below historical cyclical peaks. The combination of an aging fleet, measured new supply, and the historically lean order book creates a constructive medium-term supply backdrop for the MR product tanker market.

Let's now turn to slide 12, which highlights the trade demand outlook for product tankers. Seaborne trade in refined petroleum products has expanded significantly over the past decade or so, growing from 19.4 million barrels per day in 2010 to around 23 million barrels per day in 2025. More importantly, ton-mile demand has grown even faster, from approximately 2.6 trillion ton-miles in 2010 to nearly 3.7 trillion ton-miles in 2025. This reflects a structural shift towards longer voyage distances, which supports product tanker demand beyond simple volume growth.

Global oil consumption has demonstrated remarkable resilience, growing from 79 million barrels per day in 2003 to more than 110 million barrels per day during the first half of 2026, despite the temporary disruption experienced during the pandemic. This sustained demand provides a stable foundation for refiner throughput. Finally, global refining capacity has broadly kept apace, expanding from 92 million barrels per day in 2010 to around 103 million barrels per day today, and is projected to reach approximately 105 million barrels per day by 2028. Together, these fundamentals also provide support to a constructive outlook for product tanker demand. Let's move now to slide 13 to summarize the current product tanker outlook. MR tanker fundamentals remain constructive despite a weaker macroeconomic backdrop.

While global clean petroleum product trade is expected to contract by about 5.9% in 2026 by Clarksons, trade demand is supported by structurally longer haul trading patterns rather than volume growth. The Middle East supply shock has fundamentally reshaped trade flows. Reduced Middle East Gulf exports have increased reliance on Atlantic basin suppliers, the U.S. Gulf, Northwest Europe, creating longer voyages and stronger MR utilization. The Russian sanctions have reinforced this dynamic further, redirecting demand towards Atlantic suppliers. Diesel and gasoline account for over 70% of MR cargo volumes. While refining activity has softened, these headwinds have largely been offset by historical inefficiencies across global supply chains. Freight rates have normalized from their peaks but remain well above long-term averages. Historically, low global inventories represent a meaningful upside catalyst. The 2027 and 2028 global inventories rebuild cycle could generate transportation demand in excess of normal consumption levels.