Q2 2020 Seanergy Maritime Holdings Corp Earnings Call
Please continue to stand by feel confident well begin shortly.
[music].
Thank you just standing by ladies and gentlemen, and welcome to the Seanergy Maritime Conference call on the second quarter 2024, not sure.
We have with us mr., the mark to some tightness chairman and Chief Executive Officer, I missed the stuff, let's give takis Chief financial officer, if the company.
At this time, all participants are going to listen only mode.
Well be a presentation followed by question it out for session at which time if you wish to ask a question. Please press star one on your telephone keypad and wait feel name to be an outsourced.
I must advise you that this conference is being recorded today.
Please be advised that the company publicly released its find out she was oaks, which are available today right on the synergy website, a synergy maritime dot com.
If you do not have a copy of the press release, you may contact capital link up to one to 6617566 and they won't be happy to send it to you.
The full time into correlated to Mr son, Thomas we would like to remind you did this conference call contains forward looking statements as defined in section 27 eight of the Securities Act is 1933 as amended and section 21, eight if the Securities Exchange Act of 1934 as amended.
Concerning future events on the company's great strategy I'm measures to implement such strategy words, such as expects intends plans believes anticipates.
Estimates and variations of such whats I'm similar expressions are intended to identify forward looking statements.
These statements involve known and unknown risks and all based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which up beyond the control if the company.
Actual results may differ materially from those expressed or implied by such forward looking statements.
Does that could cause actual results to differ materially include but not limited to competitive factors in the market in which the company off right.
Risks associated with operations outside the United States change in rules and regulations applicable to the shipping industry and other risk factors included from time to time and the company's annual report on form 20-F, <unk> other filings with Securities and Exchange Commission the S E C.
The company's filings can be obtained free of charge on the species website at www Dot S E C Dot Gov.
The company expressly disclaims any obligations, though undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the companys expectations with respect that to any change in offense conditions, all circumstances, which any statement is based.
Now I will pass the floor to Mr. Some Thomas Please go ahead Sir.
Our goal is in good health in this difficult circumstances.
I was explained extensively figures communications. The first couple of other drug <unk> was one of one of the most challenging producer in the history of the dry but it's mark.
Shoes like other factors, including the continues but at the corporate learning from them.
So severe difficulties for society fishing business is of course the globe.
And of course with the Capesize Mark.
During these times, but it'll probably ought to be comparing it to be the health and safety football or people on board to ships out of stuff as well or something high quality.
Service, we're always provide where clients.
No that was I think all of our crew members for their so called Beekman can accomplish.
We're very successful in doing so both in Q1 and <unk> business continued to run if we simply without disruption.
In addition, we have worked tirelessly on many fronts to set physically position seanergy asbestos, possibly for the future.
Oh stuff, there's school breaks for a couple of works I know sort of performance kindergartens groups as Mark stuff. That's I will provide an update from the very important events that have taken place seem sort of lost entering school in June.
The time charter equivalent over fleet for the first six months or 70 countries.
Fortunately 7000, but it should produce compared to approximately $8400, but they tend to first six months of proposal in theory.
This is for that line would you ever it's been a neutral for Boulder future index in the six month period of time to Doug.
I'm sick has improved significantly with gosh, it deserves inaccessible 70.4 million.
But to $14.6 million as of December 31st as I was wondering too.
Our stockholders equity of 58 and medium is the highest level recorded since the company's Eddie launching in 2016.
Since the middle of June that's other rigs with geared vessels.
That's 32 billion first recovery and the Mark has now stabilized at various levels.
After reaching historical lows of $3000 per day, <unk>, yeah, but its daily earnings of the Bcr because more than 53000, but they you know really put themselves in dollars, but they know the July before stabilizing that levels from Philadelphia during $2000 per day.
The Capesize market has a tremendous ability to recover quickly during that period of high incident free and just makes us very confident into some fundamentals of our business.
We expect to see this recovery extensively cyclical for the year seems to be month for coracle monitors remains very robust.
That's all major iron ore mined there's nobody that I did for the confidence in the export levels.
It sounds a bit more traditional this positive outlook I'm pleased to shoot other ships Lynch OVARA more for more major export sports have order to cover to normalized levels.
All of our vessels are employed in sports or index linked charters that allow us with the full advantage over the positive market conditions.
I think seven south of shouldn't that be 11 ships over flood employed on index in time charters, because I love sooner to enjoy full utilization will closely tracking the groups as mark.
Our daily time charter equivalent for the third quarter of 220.
Based on approximately 88% OVARA available days sensing, though that's approximately $22400, but they which is almost 200 Morgan 200% higher than that first half stem sounds like we're going to break.
Oh like now to discuss the most important developments that took place and since our last handling schools.
The second quarter of 10 to 20 soon as it was very successful in a series of quite lucrative transactions.
Regarding fleet expansion during the second quarter, we agreed to purchase 2005, Japanese built capesize vessel for 11.4 million.
But I should especially as one of the lowest ever recorded im assuming that transaction.
Acquisition.
<unk> gosh and by investing some of the proceeds are worked up the letters in transactions in a highly accretive manner.
Based on the gun level of the Capesize futures and on the fact that they sort of world have any that said it was publications, which but to generate very strong cash flows immediately upon the liberty.
In addition in late May 20 to 20, we felt that expanded our business relationship with Glencore.
Through the addition of a set vessel under the commercial arrangement that sooner just by entered into sector.
The nights it was the Liberty Glenn good for a period of up to five years full incur scrub it im solution, which was fully paid for by the client.
Most importantly, 70% of our fleet, there's no employed under index linked charters, taking advantage of the steep improvement in capesize rates.
Another highly accretive transaction was the gain we managed to achieve with one of our legacy lenders.
After the Muslim negotiations with one of our previous banks, we accomplished a 5.6 million to gain from refinancing at 29.1 million dollar loss I seem to be like things tend to $3.5 million that was sourced by a new loans from or one of our current lenders I was where large corporate customers yours.
Through this transaction not totally we extended eliminate the maturity to 275, but we also reduced corporate leverage by 6.6 million.
Beginning of this deal would be reflected you know that's core to find out sort of statements.
Regarding other facilities with the maturing 220, we're making good progress you know discussions with orlando's, where the objective of extending the maturities unfettered improvement Confederate improving the financing to others.
We expect to be able to provide further updates in the coming months and we're very optimistic about the outcome.
In total over the first six months of professional and since you seem to do because it finds himself Brooks and at least 60 million of loan facilities.
CFO will offer more detail shortly but we have program would have proven once again, how strong the ability to source.
During a difficult time for dry bulk market and the global economy.
When combined with a consolidation activities concluded so far within 10 to 20 these transactions to ensure synergies well funded and in good position to take advantage of rising threatens the capesize market.
Before handing the call over to our CFO stuff. What's your stock is I Wonder if you who will review our financial performance for the reporting period I would like to what age at age that improved market conditions seem God Anthony will lead to a much stronger second half of the year.
This is in line with what we're so both in 2019 entering 2018 when the improvement in the second part of the year was only enough to offset the weaker performance. During the first six months, but also led to the strongest on your rates over the last five years.
You know do isn't as strong position to capitalize on a very robust mcus environment.
No them, having to go now to Mr. stuff was just I guess.
Thank you some of these good morning, everyone I hope that you and your family sets being safe and healthy.
In terms of our financial performance I, specifically for you to the end exposed to release <unk> second quarter in first half finance. It is also investing performance accidental Coleman, our numbers would adversely impacted by the usual negative seasonality to the keeps his market coupled with Sam said.
It goes by the decision did you get to plays out pretty equal to covert and then can pandemic.
The global GTB go did one of the steepest decline save it as a cyclical due to the year Mark would be cool the quite MP majors enforced globally thought that is the kids crises.
As discussed previously, but some of these since mid June conditions for the keeps his markets I would note my life, resulting in a they said its achieving but that eggs.
You didn't get encouraging to see the market was able to recover strongly and stabilize at sustainable levels through a very challenging and I said in periods like the past six months.
Summarizes the key figures for the video images, but it can get everything you sort of second quarter of doing between be be fine does it ever and yourself to deducting all gets expensed in commissions with 4.7 media on one of the Boggles Innovates time charter equivalent of 5404 per day.
Period.
Time charter equivalent to four months was mainly bhakti.
The unfavorable timing of Freak show, so <unk> for a city. This is that they're not employed on index lead time charters.
Those would fix them for years before June and does thoughts were not able to benefit from the subsequent market improvement.
This was in reality of the market to me, but let me freight and the resulting time charter equivalent rate would be below operating breakevens and usually keep says when we get these problems mutations.
Once you go meet.
But the said some great. Your time charter equivalent is given for the next two to three months.
This is why even excluding strategy provides for the natural wage, but the fact that market.
On a positive note guidance me all three support vessels out in position to fix it next we'll get imminently, we should be vis the negative impact over the previous features.
And do pretty considerably part of predicting for stability.
Okay got you will find that said results for the six month period, and then B.
On June 32 inch 20, net operating revenues decreased 12.3 me doing from 14.8 million in the first couple of last year.
The decline being attribute it to be deteriorating market conditions.
Similarly, the downside to that we were under for fleet for the first thing to do anything stood at approximately 7000 <unk>.
I would like to point out that over the six month period, which it uses it doesn't mean bucked the trend, but the collateral gets featured a fleet performance was in line, we thought over the Baltic Capesize index, which analytics of approximately 7200 in the same <unk>.
Operating expenses management fees engine that we said do expenses milestone the merger and integration of the first couple of trying to do anything.
Which is the first couple of things 19.
Indiana. The 40 revenue proved to be the main factor behind the declining EBITDA, which it it's near the 1.1 medium for the first thought for this year. They send EBITDA of 2.1 million for the same beautifullest here.
Net loss for the six month period was approximately 19.6 million <unk> line being negatively affected by the previously discussed it could be nobody can get everything.
I would like this that the bottom line result does not include the largest financing gain of 5.6 media that we expect to go into third quarter of 23.
Holding settlement of one of my biggest facilities.
Okay.
I think discount in July.
Turning to a button and see that sort of June 32 inch thinking.
Ended the quarter.
2.4 million in person that's equivalent instead hold it.
He was equal to 58 million.
Apologists, both being the case 11 scored it seems to be 15, and after having fully absorbed the impact of the low market and associated costs, but also.
The first couple of the year.
Equally importantly, we have mark see double improvement you know trade working capital position, which was reduced by approximately 7 million compared to the 29.0 and position.
Total that met those deferred finance charges I was inflict on our balance sheet amounted to 199 million.
So this will be noting that the financing with the loan facility secured by the vessels notice you been gene issue, we have to be effect of reducing our debt outstanding by 6.6 million from the quarter in figure.
By comparison, the customer decision as a company like the end of the you was 14.5 million and debt outstanding was equal to 207 million.
I'm optimistic that do you.
Disagrees boom and easy to position achieved on that a difficult given vitamin we provide an important foundation for the company skewed.
As discussed previously, but some of these the time charter equivalent of her fleet for the third quarter stance in excess of 20000 per day, and we expect to generate gosh. What are you using did over the next two quarters.
<unk> I would like to odd that our latest vessel acquisition, he's going to be financed entirely Wisconsin hand, and these consequently expected to contribute to the company's feed cost flew on did any future market than vitamin.
At this point I'd like to focus on the measures would take it during the first six months of the you to preserve and generally we could be a school facing side of it. We just keep says markets in the last 50 years.
Let's use of capital market transactions, including an underwritten public offering for instead of edict offerings and exercises would be associated warrants. We they said they've done a 47 million of net proceeds.
What do these proceeds we were able to achieve <unk>.
Firstly, we successfully address the cost burden of the first half goes by the died and market conditions, Secondly, we considerably improved or trade working capital position.
Thirdly, we supported though to financing exports and finally, we were able to also filings with the acquisition of a good quality vessels, we from the Liberty, adding this way to the company's growth prospects and nobody can scale.
I see it could not previous update we expected we continue to emphasize mean thing we'd been flexibility to respond to that I believe changing and highly uncertain market conditions mix would be leveraging on the balance sheet, improving the fleets cash flow generating capacity.
Lastly, I would like to provide some updates on the refinancing activities.
Personally during March Centstwenty, we refinanced two loan facilities secured by the leadership in this quarter <unk>, having a total amount outstanding or 51.1 medium.
The mix in the maturities over the two loans wedding marched through into drinking in November 2021 days make deeply and both would extend into December 2022.
The main to answer the facilities. They remained unchanged, while most corporate level covenants with council I was willing to let them be within the distinctions.
Secondly, as discussed previously Bosio in June, which if the positive outcome the facilities a good by the Jewish had been globally. She said was originally scheduled to mature on June 30 Twentytwenty.
The drinking 9.1 million outstanding under the loan was felt that said the full 23.5 media on.
The closing of the transaction was completed in July and the resulting accounting gain we'd be reflected in the third quarter results.
You know due to the financing facility on July 15, 20 drinking we entered into a new five good loan facility within existing said by the lender of the company.
The new facility Guy the significant benefits for the company's things Hey, you're done with diabetes through much lower coatings goldman's it is helping load, but given that age investing through three guys flow and be easy lights on covenants individual institutions I love for increased financial flexibility.
I see the drugs. The said few 2 million to maturity schedule for December Twentytwenty. We're at this point on the advance discussions with underlying lender to achieving mutually advantageous solution, which we expect we see them or to do a facility being extended and they didn't grouped Adams.
A little further to be paid is gonna be provided at this point, we'll have to note that we were able to find this more than 60 million of maturing senior debt during the past six months deliberating always in a timely minded and consistently with fad guidance.
Holdings that that would be no other significant senior did much who seem to instant drawn and the next scheduled maturity will be November twentytwenty too.
Given that the Bose, if you've been improving tend to cause developing the gifts as market over the past three years. He is likely to do over the next to use as well.
We expect our customer eating up but between grew one if we get a basis, even a supportive to quoted but four months is likely to be volatile.
This completes my view of the financials I would note tend to go but some are these who'll discuss the market and industry fundamentals.
Thanks <unk>.
Moving to the industry outlook as we mentioned in the beginning of our called the Capesize sector was severely affected in the first six months. Since then thing my body was negative factors such as the weather disruptions and the outsized impact of the coffee 19 pandemic worldwide.
Resilient iron ore exports, which are very fundamental for a business. The first half first and then through what about 15% lower than the older at the lowest the volumes seen in 2019. When there was also the major trucks into Atlanta flatness keep producing areas.
Lower cargo flows. However, we're not the result of what we can be month.
<unk> as it continues strong demand for core commodities, especially I don't know driven mostly by the three loans in infrastructure investments globally and government stimulus packages in China and other countries.
I just mentioned that live from June onwards trade volumes have recovered to put it guys levels and the Capesize market has performed exceptionally well.
Got it support that age of about $20000 that day and the as I say level for that as up to 10 gig is approximately 21000 barrels a day.
Looking towards the next year in more detail in 2021, the volume of trade is expected to return to growth of 6.2%.
The latest guidance or from Brazil major iron ore my mind, our vitally indicate a gradually recovering production toward almost 400 million thoughts, but on them by 222 from $310 million guidance for the uncertainty and that implies more than 25% increase in out.
At the same time, well certainly in my notes continued to expand capacity steadily we view these developments as major factors for the future growth in demand for Capesize vessels.
As it goes to fleet growth. The Capesize order book is at historically low levels as mentioned before that there isn't a previous two and expose the international might sound organization regulations regarding shield to emissions are bound to become very restricted from 10 to 50 on the words and the uncertainty around new vessels and engine designs makes it.
But it's hard for ship owners to commit to new investments.
This is also clearly reflected in the lack of availability of financing for new projects.
The positive supply outlook in the face of study I don't know demand has been the main factors supporting the strong capesize market performance since 2018, and this is evidenced by the resilience of the capesize rates, even during the highly uncertain macroeconomic environment over the past years, we're confident that is going to continue.
You know this emphasis on the improvement of the fleets and about a mental efficiency and the establishment of a longstanding relationships with prominence out that us ensure our fleets continue to commence their success.
Synergy is the only pure play Capesize listed company with all of our ships taking advantage over the positive muddy conditions. Moreover, our strong balance it will allow us to capitalize on attractive opportunities at historically low us advisors and the LIBOR has always highly accretive transactions to upset holders.
No that would let spend to go over to the operator and answer any questions. You may have showed Jody please take over.
Thank you very much Sir ladies and gentlemen, if you wish to ask the question. Please press star one I'll know telephone keypad and wait till named be announced.
Oh first question is on the line of pay flat some notebook capital markets. Please go ahead.
Good morning.
I will.
Several questions. The first one is I'm a good ship delivery it sounds like it hasn't been delivered yet.
And then can you highlight when you're expected to be deliberate and then what the actual payment would be ex any deposit did you put down.
Yes, so as you know.
The got into covered 19 or situation globally has made the vessel deliveries are very very challenging.
But as always we have managed to secure a and right now it sets in a safe area for the change of groups and I believe it or the ship and this is expected to happen every day to be honest. So you know obviously the boards that had been closing down automatically there. That's all the ships to other parts that are still open and that creates queues and that's a pretty much.
But then they know that south as soon as yet another bunch of the world. So if I can answer the question not boats basically any daming make up intermodal or by the end of this week. It may happen early next week. So it's it's a matter of or some other of a couple of days for the vessel to take delivery.
And in respect of Fame and do have already submitted the 10% been stolen deposit went away it could be the transaction show the remaining goninety person, who will be paid up on the actual deliberate as a ship. So that's also going to be him that.
Okay, Great and then is it because of the uncertainty did you include it in your work copper of 88% of the remaining days.
You know cupboard or was it excluded from that calculation.
No. This is actually excluding political collections excluded.
Okay and then when you look at the Ford cover is there a material change your a difference between the you know you said that 21000 for asked that day rates for the rest of the year is there a major difference between the third quarter record third quarter and the fourth quarter average are they pretty close.
Well the fourth quarter is actually a little bit lower than with headquarters. So right now that's needed something which is 88% so far and vessel days for a available days for 2000 and I'm sorry for the third quarter.
Picks up that tend to $2400 a day that Q4 is a little bit lower but that's how the kind of work show you know, we we expect the affordable care to standardizing that together with the actual physical market.
Okay.
Have you done the same calculation for the fourth quarter, yes, the modest as far as just because here you know the way you're looking at is based on index linked I time charters to have you calculated fourth quarter coverage at all.
Right not so much I mean would have not done so because most of.
The spot voyages and within September end of September beginning of October. So I don't want to be Misguiding, you know given guidance about let's say five or 10 or 15% well the days for Q4. So I don't want to give 'em you know some sort of guidance for Q4.
Okay great.
Okay sounds good and when you look at industry supplies are you outlined it why you thought that Andrew see supply might be needed. Your whether it's a 2030, you know potentially tighter emissions and you know financing challenge is that the industry faces as far as hopefully new capacity coming onto the.
Market. When you do you think there is a scrapping wade coming once the yards opened up you know they've been it seems like you know close for the most part over the first half a year, whether its bank, let Josh India or where packet Sandy do you think there potentially is a pickup in.
Scrapping coming.
There's a material number of ships that are pretty 2000 bills and these other converted the or colliers that that then you know their opinion.
Need to be scrapped the Asap, because you know they have proven to be acceptable attire in various ways. So that's it needs to be prioritized and you know.
Exit the market, that's witless possible letters of course sets into our lives that is it getting into the markets right now but you.
You know bull come to think about it the with Brazilian the volumes this year, well together that around 250 million tones, including that had a thought of it.
Miners, the Michael has pretty much stabilized and given the fact that we expect than 50 or even $100 million more trade out of Brazil in the next couple of years and that's especially the official guidance of this miners.
Any new tonnage is a very very well gonna be absorbed and the in up you know there's going to be a gap that invesco's supply. So this is what we see so far we don't want to be optimistic that goes into those world nobody can give and take or projections of course, but I wouldn't to focus so much on the supply discipleship side.
Focus mostly on the supply of cargoes.
And then given a very low here this year I would expect that to recover significantly into and it doesn't do on and that's one thing to do.
Great.
Thanks on and then standards on that on the new loan facility I haven't seen the amortization schedule or information.
The amortization schedule do you have that.
Valuable or maybe another way to look at it can you look at can you give us the number or the loan amortization that you're looking at up to the second half a year by quarter.
What what loan amortization to you what are you seeing the third quarter and then fourth quarter.
Hi.
Hello, how are you.
Very well how are you I'm, good and with a good so I mean, the amortization of the new interest facilities around the half a million per quarter for both of those cities, which is basically 50% of them what physicians who tried in the previous facility.
And now concerning our our quarterly.
But it's funny to payments.
And in line with would be what you have seen I mean, the previous years. So it's a between five and five and a half comedian.
No there have been somebody said on sort of sort of say two quarters on some of us easy leasing, which we are in discussions we found that lying lenders and we expect to catch up on this if at least once we finalize their discussions as part of the solutions that we're currently working on so basically I mean, assuming that we are.
Able to finalize within the third quarter you, we've seen significant improvement on our total bid figure, which is a view on or off that they do so June.
Okay, and just a couple of more detailed questions. Just it looked like I think that's DNA expenses were up in the second quarter.
Is there a reason for that and then also what's the outlook for the second half this words S. DNA expenses.
There was a marginal in could as soon as you and expenses and that had to deal with a timing Gulf sets and payments or to the good expects authorities and stuff or is it the regular for the of stuff for the company. That's that's about it it's just a matter of time.
Okay, and then do you think bid over the second half a year ago decline a little bed or should we just see it's flat as far as.
You know quarterly I assume there for the rest of the year.
It's pretty much the same in 'em, we tried to spread it over as much as weekend throughout the year, but Oh I would generally use the same pretty much same rate.
Okay and then.
Separate school would you'd be able to give to us on your operating cash flow for the quarter and then also the working capital changes.
And that you saw during the quarter.
The working capital changes.
No change these are the ones mentioned on the goal is around seven median if compared to the year in free figure and it's our around EUR.
8.3 million when compared to the end of the previous quarter.
Okay.
And what do you ever happened, but you've got a whole improvement there compared to what you have seen I mean, the do here now whatever thank you standing with I think I hear the trade working capital position of our down to 800000 provision, which given I mean, a the size of the company's way since it's pretty normal.
Great. Okay. Thanks, a lot for your time.
Thank you Paul.
That's a reminder, ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone keypad.
I mean, they said the questions coming three so I've had the coupon to yourselves.
Okay, Jody once again I would like to thank everyone for participating and to our call today and I wish everyone a to be safe in good health and thank you everyone. Thank you.
Thank you fine so ladies and gentlemen that does conclude the call for today. Thank you all for joining you may now disconnect your lines.
[music].