EuroDry Ltd. (EDRY) Earnings

Management highlights

- Capital Allocation and Balance Sheet * Since launching a 10 million share repurchase program in August 2022, Eurodry has repurchased 358,130 common shares for $5.8 million. The board recently re-approved and extended the program for another year, with repurchases to continue in a disciplined, measured manner based on market conditions. * The company signed terms to refinance MV Ekaterini with a $19 million loan facility ($8 million higher than the existing loan balance), boosting liquidity, subject to customary closing conditions. * As of June 30, 2026, total outstanding debt was $98.1 million with an average margin of 1.99% and average total interest cost of 5.74%. Total assets hit $212.5 million, total liabilities were $103.1 million (48.5% of total assets), and book value of common shareholder equity was $100 million ($34.92 per share). The company estimates adjusted net asset value per share exceeds $60.81, representing a large discount to current share price around $28. - Fleet and Operations * Eurodry currently operates 11 vessels with total carrying capacity of ~766,000 deadweight tons, average age 13.8 years. Four new builds are on order: two 63,500 deadweight ton ultramax vessels scheduled for delivery in Q2 and Q3 2027, and two 52,000 deadweight ton kamsarmax vessels scheduled for delivery in Q1 and Q2 2028. Upon completion of deliveries, total fleet will grow to 15 vessels with 1.06 million deadweight tons total capacity, including 5 eco-friendly vessels. * In Q2 2026, commercial and operational utilization hit 100%, with no off-hire time for dry docking. Four vessels operate on index-linked charters tied to the Baltic Supermax 10TC index for market exposure and flexibility, while most remaining vessels are on short-term (1-3 month) fixed-rate charters; only MV Christos K has a longer-term fixed charter through November 2026. * The company entered two forward freight agreements for Q3 2026 at $17,250 and $17,000 per day, each covering one vessel equivalent. - Market and Strategic Positioning * Dry bulk markets strengthened significantly year-over-year in Q2 2026: the Baltic Dry Index rose 78% YoY, and the Baltic Panamax Index rose 54% YoY. As of late July 2026, one-year Panamax time charter rates were $17,125 per day, above the historical median of $13,450, and 10-year-old Panamax asset values are near 10-year highs at ~$30.5 million. * Management chose to invest in new builds rather than acquire secondhand vessels at current market peak prices, as new builds offer better value, superior operational efficiency, lower emissions, and lower long-term maintenance costs. This disciplined fleet renewal strategy positions the company for stronger earnings once market conditions normalize while reducing exposure to aging vessel inefficiencies. * As of July 2026, the global dry bulk order book is 14.4% of the existing fleet, which remains among the lowest levels in historical context (down from 66% in 2008 and 24% in 2014).

Guidance

- Based on current forward freight market rates as of July 30, 2026, indicative full-year 2026 annualized EBITDA is projected to be $38.4 million. A $1,000 per day change in average rates for open vessels would change 2026 EBITDA by $1.4 million and EPS by $0.50. * 28% of available vessel days for the remainder of 2026 are covered by fixed-rate contracts: 50% coverage for Q3 2026, and 6% coverage for Q4 2026. * Management expects the 2027 dry bulk market to be balanced but more uncertain than 2026, with fundamentals expected to remain supportive relative to historical levels. * Operating expenses are expected to remain near current budget levels, with total year-over-year inflation-related increases of less than 3%, and no expected unexpected cost increases in H2 2026. * Global dry bulk demand growth is projected to be 3.8% in 2026 and 1.8% in 2027 by industry analysts, despite broader macroeconomic headwinds.

Segment performance

Eurodry operates as a single consolidated dry bulk shipping firm, so separate product segment financials are not broken out in the transcript. Aggregate Q2 2026 results: Total net revenues = $17.7 million, net income attributable to controlling shareholders = $6.59 million ($2.32 diluted EPS), adjusted net income = $6.95 million ($2.44 diluted EPS), adjusted EBITDA = $11.71 million. This compares to a net loss of $3.1 million and adjusted EBITDA of $1.9 million in Q2 2025, representing a over five-fold year-over-year increase in adjusted EBITDA. For the first half of 2026: Total net revenues = $30.5 million (49% increase from $20.5 million in H1 2025), net income attributable to controlling shareholders = $6.8 million (compared to a net loss of $6.8 million in H1 2025), adjusted EBITDA = $16.6 million (18-fold increase from $0.85 million in H1 2025). Operational metrics for Q2 2026: 11 vessels average operated, 100% commercial and operational utilization, average time charter equivalent rate = $20,398 per day (more than double the $10,428 per day in Q2 2025), total operating expenses = $7,444 per vessel per day (slight decrease from $7,539 in Q2 2025), cash flow breakeven = $11,858 per vessel per day (decrease from $12,222 in Q2 2025).

Risks & headwinds

- Macroeconomic risks: Elevated energy prices, stalled global disinflation, and high U.S. Treasury yields have kept interest rates high, which could pressure shipping demand and financing costs. Geopolitical risks including the ongoing Iran conflict and Ukraine-Russia war create energy price volatility and inflationary pressures. Red Sea routing inefficiencies and U.S.-China trade tensions also add uncertainty to market conditions. * Demand-side risks: Coal demand growth has stalled year-to-date due to lower Chinese and Indian demand and Indonesian export restrictions. Chinese import demand faces broader economic headwinds, even if it has remained resilient so far. * Supply-side risks: Ordering activity has accelerated in recent months, increasing future fleet growth. Scheduled gross new build deliveries are projected at 4.5% of existing fleet for 2026 and 2027, and 6.9% for 2028 and beyond, up from 5.5% for 2028+ in May 2026. * Operational and market risks: Voyage expense gains from rising bunker prices in Q2 2026 could reverse if oil prices decline, leading to small negative voyage expenses in future periods. Any agreement to normalize trade in the Gulf could reduce shipping inefficiencies but also release tonnage back to the market and moderate coal demand, potentially pressuring rates. 2027 market conditions depend on multiple uncertain variables including Chinese steel production, geopolitical outcomes, and the pace of Simandou project ramp-up.

Analyst Q&A

• Q: How will average debt margins change as the company takes on new debt for new builds? Do recent loan quotes point to lower spreads? /

  A: Management expects average margins will most likely decline. New loan quotes from banks are well below 2%, closer to 1.5%, matching the most recent new financing the company completed, which will pull the overall average margin down. (71 characters)

• Q: Given that off-hire days have fallen significantly in 2026, will off-hire days increase in 2027 due to scheduled dry dockings? /

  A: Some increase in off-hire days tied to dry dockings is expected in 2027, as one vessel is due for full dry docking and others are scheduled for in-water surveys. Management will work to keep all commercial and operational off-hire time to a minimum. (112 characters)

• Q: How does the company’s chartering strategy approach vessels rolling off charters in late 2026: will it lock in longer-term fixed rates or keep spot market exposure? /

  A: The board’s current strategy is to fix additional vessels on one-year or longer-term charters if rates can be secured in the high teens or above. If rates are in the mid-teens or lower, the company prefers to retain spot market exposure to benefit from future rate increases. (144 characters)

• Q: A Cape Size operator argued that low order books and aging fleets create structural supply support that outweighs macro demand uncertainty. Does this hold for your Ultramax/Kamsarmax classes? /

  A: For Eurodry’s vessel segments, the order book is slightly higher than for Cape Size, but the fleet age profile is older, which counterbalances that dynamic. Management notes both supply and demand matter equally; demand was the determining factor in weak 2025 markets, and the current balanced supply-demand environment is supportive for 2026 and 2027. (168 characters)