EuroDry Q2 FY26 earnings call EDRY

EuroDry reported strong Q2 2026 results with total net revenues of $17.7 million, up 57% YoY from $11.3 million in Q2 2025. Adjusted net income attributable to controlling shareholders was $6.95 million or $2.44 per diluted share. Adjusted EBITDA surged to $11.7 million, a more than fivefold increase compared to $1.9 million in Q2 2025. For the first half of 2026, total net revenues were $30.5 million, up 49% YoY from $20.5 million in H1 2025, with adjusted EBITDA of $16.6 million, an 18-fold increase from $0.85 million in H1 2025. Interest expenses decreased due to lower benchmark rates and average debt, while H1 2025 included a $2.1 million gain on vessel sale.

The company maintains a flexible fleet deployment strategy, with four vessels currently operating on index-linked charters tied to the Baltic Supramax S10TC Index, providing direct market exposure. The remaining vessels are employed on fixed-rate time charters, mostly for one to three months, with MV Christos K fixed through November 2026. EuroDry also utilized forward freight agreements (FFAs), selling two 90-day Kamsarmax 825 TC average contracts for Q3 2026 at $17,250 and $17,100 per day, effectively hedging market exposure.

EuroDry currently operates a fleet of 11 vessels with an average age of 13.8 years and a total carrying capacity of approximately 766,000 deadweight tons. The company has four newbuildings on order: two Ultramax vessels (63,500 DWT each) scheduled for delivery in Q2 and Q3 2027, and two Kamsarmax vessels (82,000 DWT each) for delivery in Q1 and Q2 2028. Upon delivery, the fleet will grow to 15 vessels with a total carrying capacity of approximately 1.06 million deadweight tons, comprising eight Ultramax, four Kamsarmax (all eco-friendly), and three legacy Panamax vessels.

Panamax rates averaged $17,969 per day in Q2 2026, moderating slightly to $17,150 by late July. One-year time charter rates strengthened to $17,175 per day as of July 31, reflecting confidence in the market. The Baltic Dry Index and Baltic Panamax Index recorded significant YoY increases of 78% and 54% respectively. Asset values for 10-year-old Panamax vessels are currently priced at $30.5 million, well above the historical median of $19.5 million and the 10-year average of $19.2 million, indicating near 10-year highs.

According to the IMF, global growth is projected to slow to 3% in 2026 before recovering to 3.4% in 2027. World trade volume growth is expected to slow from 5% in 2025 to 3.5% in 2026, recovering to 4.3% in 2027. U.S. growth is forecast at 2.3% for 2026 and 2.2% for 2027, while China is projected to grow 4.6% in 2026. Geopolitical developments, including the Iran conflict and Ukraine-Russia war, contribute to elevated energy prices and inflationary pressures, with the 10-year U.S. Treasury yield at 4.7%.

The dry bulk order book stood at 14.4% of the existing fleet as of July 2026, which, while higher than 7% in 2021, remains among the lowest levels historically (e.g., 66% in 2008). Approximately 11.8% of the total fleet is over 20 years old, representing potential scrapping candidates. Scheduled newbuilding deliveries are projected at 4.5% for 2026 and 2027, and 6.9% for 2028 and beyond, with actual fleet growth expected to be lower due to slippage and demolition activity.

The Board reapproved a $10 million share repurchase program, under which $5.8 million has been used to repurchase 358,130 shares since August 2022. The company also signed a term sheet to refinance the MV Ekaterini with a $19 million loan facility, increasing liquidity by almost $8 million. This disciplined capital allocation prioritizes investments in newbuildings over second-hand tonnage at peak market levels, aiming for superior operational efficiency and reduced emissions.