Q1 2024 Seanergy Maritime Holdings Corp Earnings Call
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Synergy Maritime Holdings Co-op conference call on the first quarter ended March 31st, 2024 financial results. We have with us Mr. Stamatios Tsantanis, Chairman and CEO, and Mr. Stavros Gyftakis, Chief Financial Officer, of Synergy Maritime Holdings Corp. At this time, all There will be a question and answer session, at which time, if you would like to ask a question, please press star, 1, 1 on your telephone keypad, and you will then hear an automated message advising that your hand is raised.
Okay.
Thank you for standing by ladies and gentlemen, and welcome to the Phoenix You Maritime Holdings Conference call on the first quarter ended March 31st 2024 financial results.
Speaker Change: But how would ask me system at this time.
Speaker Change: As chairman and CEO and Mr. <unk>.
Speaker Change: Nigel Officer authentic your Maritime Holdings Corp. At this time, all participants are in listen only mode. There will be the question and answer session at which time, if you would like to ask a question. Please press star one one telephone keypad and you won't get a kit and that's about the math that you bought that you'll have this race.
Operator: Please be advised that this conference call is being recorded today, Wednesday, May 15th, 2024. The archived webcast of the conference call will soon be made available on the Synergy website under the webcast and presentations sections under the investor relations page. Many of the remarks today contain forward-looking statements based on current expectations. However, actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the first quarter ended March 31, 2024, earnings release, which is available on the Synergy website again at www.synergymaritime.com. I would now like to turn the conference over to one of your speakers today, the chairman and CEO of the company, Mr. Stamatios Tsantanis. Please go
Speaker Change: Please be advised that this conference call is being recorded today Wednesday may 15th 2024.
Speaker Change: The archived webcast of the conference call will soon be made available on the furniture website www dot seen that your maritime that come on to the webcast and presentation section under the Investor Relations page.
Speaker Change: Many of the remarks today contain forward looking statements based on current expectations.
Speaker Change: Actual results may differ materially from the results projected from those forward looking statements.
Speaker Change: Additional information concerning factors that could cause the actual results to differ materially from those in the forward looking statements is contained in the first quarter ended March 31st 2024.
Speaker Change: <unk>, which is available on the thing that your website again, www dot energy Maritime Dot com.
Speaker Change: I would now like to turn the conference over to one of your speakers today, the chairman and CEO of the company. Mr. <unk>. Please go ahead Sir.
Stamatios Tsantanis: Thank you, operator. Hello, I would like to welcome everyone to our conference call. Today we are presenting the financial results for the first quarter of 2024 and an update on our recent corporate development. I am pleased to report that in the three-month period that ended on March 31st, 2024, Synergy achieved record profitability, generating a net income of approximately $10 million in the usual weakest quarter of the year for the cape size segment. After a volatile 2023, 2024 has started very strongly for the dry bullet market, with the Baltic Capes index staging its best first quarter performance in more than 10 years.
Speaker Change: Thank you operator.
Speaker Change: Hello, I would like to welcome everyone to our conference call.
Stamatios Tsantanis: Synergy was optimally positioned to take advantage of this positive market environment, leading to its best performing first quarter on record, fully reflected in net revenues of $38.3 million versus $18 million in the same period last year, more than double, corresponding to an average time chart equivalent rate of more than $24,000 per day, roughly in line with the current average BCI. The improved terms achieved on rechartering our vessels over the past quarters, our effective hedging activities, and the high-specification vessels comprising our fleet have proven to be important drivers of our positive commercial performance and form important pillars of our long-term corporate strategy.
Speaker Change: They were presenting the financial results for the first quarter of 2020 for an update of our recent corporate developments I'm pleased to report.
Speaker Change: Period that ended on March 31, 2010, before synergy achieved record profitability generating a net income of approximately $10 million in the usually the weakest quarter of the year for the Capesize segment.
Speaker Change: After a volatile 2033 in 2024 has started very strongly for the dry bulk market with the Baltic Capesize index, stating its best first quarter performance in more than 10 years.
Speaker Change: Synergy was optimally positioned to take advantage of this positive market environment, leading to its best performing first quarter on record.
Speaker Change: Our fleet produced net revenues of <unk>.
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Speaker Change: Versus $18 million in the same period last year more than double corresponding to an average time charter equivalent rate of more than $24000 per day roughly in line with our current average PCI.
Speaker Change: The improved terms achieved ordinary chartering our vessels over the past quarters, our effective hedging activities and the fastest vacation vessels comprising our fleet have proven to be important drivers of our positive commercial performance and form important pillars of our long term corporate strategy look.
Stamatios Tsantanis: Looking towards the second quarter of 2024, and based on the current FFA levels, we expect our daily TCE to be equal to about $26,400 per day, likely outperforming the capesized market by a wide margin. Beyond that, for the second half of the year, we have converted about one-third of our ownership days at a fixed daily rate of approximately $30,000.
Speaker Change: Towards the second quarter of 2024 and based on the current FFA levels, we expect our daily TCE to be equal to about $26400 per day likely outperforming the capesize market by a wide margin.
Beyond that for the second half of the year, we have converted about one third of our ownership days at a fixed daily rate of approximately $30000.
Stamatios Tsantanis: As a general principle, in the currently healthy market conditions, we are keen to secure attractive fixed daily rates that can generate high free cash flow and solid returns on capital, and we remain vigilant in that respect. In light of our strong performance and consistent with our commitment to rewarding our shareholders, our Board of Directors has authorized another special dividend of 12.5 cents for the quarter, in addition to our regular quarterly dividend of 2.5 cents, for a total quarterly dividend of $0.15 per share.
Speaker Change: As a general principle during that currently healthy market conditions, we are keen to secure attractive fixed daily rate that can generate high free cash flow and solid returns on capital and we remain vigilant in that respect.
Speaker Change: In light of our strong performance and consistent with our commitment to rewarding our shareholders.
Speaker Change: Board of directors has authorized another special dividend of $12.05 for the quarter. In addition to our regular quarterly dividend of $2 five.
For our total quarterly dividend of <unk> 15 per share.
Stamatios Tsantanis: As the year progresses and we gain more visibility on market conditions, we will be evaluating the best options to further increase capital returns to our shareholders. We view this as an important priority for Synergy, and to this effect, we have declared $1.60 of cash dividends per share, or approximately $30 million, since the initiation of our policy in 2022. Given the strong capesize outlook, we are optimistic that Synergy is well positioned to continue executing on our clear corporate strategy, which entails rewarding our shareholders generously while growing and renewing our fleet.
Speaker Change: Year progresses, and we gain more visibility on market conditions, we will be evaluating the best options to further increase capital returns to our shareholders. We view this as an important priority for synergy and this effect, we have declared $1.60 of dividend cash dividend per share or approximately.
Speaker Change: $30 million since the initiation of our policy in 2022.
Speaker Change: Given the strong capesize outlook, we're optimistic that synergy is well positioned to continue executing on a clear corporate strategy, which entails a rewarding our shareholders generously while growing and renewing our fleet.
Stamatios Tsantanis: Now turning to efforts to grow our fleet, since the beginning of the year, we have agreed to acquire two more Japanese Cape-sized vessels built in 2013 and 2012. Specifically, the 2013-built Icon ship will be delivered to us promptly, and the 2012-built to-be-named Cape-sized vessel is expected to be delivered to us between July and October this year.
Speaker Change: Now turning to our efforts to grow our fleet since the beginning of the year. We have agreed to acquire two more Japanese capesize vessels built in 2015 and 2012, specifically the 2013 built icon ship will be delivered to us promptly and the 2012 build to be named Capesize vessel.
<unk> is expected to be delivered to us between July and October this year.
Stavros Gyftakis: The combined acquisition cost of $69.3 million will be funded through cash on hand and debt. As an indication of the good timing of these transactions, the current combined market value of these two vessels has appreciated by more than 10%. Before I pass the floor to Stavros, our CFO, for his review of our financials, I would like to add that I am very pleased to see Synergy operating in a balanced manner within our stated business objectives, and I view this quarter's strong financial performance as a vindication of our long-term corporate strategy. Thank you, Stamatis.
Speaker Change: Combined acquisition cost of $69 $3 million will be funded through cash on hand and debt.
Speaker Change: An indication of the good timing of these transactions. The current combined market value of these two vessels has appreciated by more than 10%.
Speaker Change: Before I pass the floor to establish our CFO for his review of our financials I would like to add that I'm very pleased to see synergy operating in a balanced manner within our stated business objectives and have you. This quarter's strong financial performance as a indication of a long term corporate strategy.
Stavros Gyftakis: I would like to welcome everyone from my side as well to our first earnings call for 2024. Let us start by reviewing the main highlights of the financial statements for the period. We had another great quarter while we achieved a record first quarter profitability, as strong Cape Size freight rates continued dominating the market. Our net revenue was equal to $38.3 million, more than double compared to the respective period last year, while our time-charter equivalent reached $24,100, very close to the average BCI for the quarter.
Speaker Change: Thank you so much I would like to welcome everyone from my side as well to our first earnings call for 2024, let us start by reviewing the main highlights of our financial statements for the period.
Stavros Gyftakis: Our adjusted EBITDA rose to $23.2 million during the first quarter, almost five-fold from the respective figure of last year. Our net income was $10.2 million compared to a net loss of $4.2 million last year, which translates to an EPS of $0.50.
Speaker Change: We had another great quarter, while we achieved a record first quarter profitability, a strong capesize freight rates continued dominating the market.
Speaker Change: Our net revenue was equal to $38 3 million more than double compared to the respective period last year, while our time charter equivalent reached to $24100 very close to the average be C&I for the quarter.
Speaker Change: Our adjusted EBITDA rose to $23 2 million during the first quarter almost five fold from the respective figure of last year.
Speaker Change: Our net income was $10 2 million compared to a net loss of $4 2 million last year, which translates to an EPS of <unk> 50 <unk>.
Stavros Gyftakis: Moving on to our balance sheet, I am pleased to say that our cash position remains strong and almost intact in the first quarter of 2024, standing at 24.2 million, or approximately 1.4 million per vessel. This was achieved despite consistent dividend payments, almost 8 million advances for the announced vessel acquisitions, and a regular debt repayment. With regard to debt outstanding, this stood at $223 million at the end of the first quarter, translating to a modest loan-to-value ratio of approximately 40%.
Speaker Change: Moving onto our balance sheet I am pleased to say that our cash position remains strong and almost intact in the first quarter of 2010 before standing at $24 2 million or approximately $1 4 million per vessel.
Speaker Change: This was achieved despite consistent dividend payments almost $8 million advances will be announced vessel acquisitions and our regular debt repayments.
Speaker Change: With regard to debt outstanding this stood at $223 million at the end of the first quarter translating to a modest loan to value ratio of approximately 40%. Finally total shareholders' equity amounted to $241 million as of March 31st 2024.
Stavros Gyftakis: Finally, total shareholder's equity amounted to $241 million as of March 31st, 2024. Let's now delve into the refinancing activities we completed in the first quarter. We agreed with one of our close lending partners to enter into three separate sale and lease back agreements of 58.3 million in aggregate to refinance a last ship and patron ship and to partly finance the acquisition of Iconship. Under this agreement, the vessels will be sold and subsequently leased back on a bare-boat basis for a five-year term, starting from the delivery date of each vessel. The Company will retain continuous options to repurchase the vessels at predetermined prices throughout the Bermuda Charter period.
Speaker Change: Let's now delve into the refinancing activities, we completed in the first quarter. We agreed with one of our closed lending partners to enter into three separate sale and leaseback agreements were $58 3 million in aggregate to refinance our last ship and Pat received and to partly finance the acquisition of frequency.
Speaker Change: Under this agreement the vessels will be sold and subsequently leased back on a variable basis for a five year term starting from the delivery date of each vessel synergy will retain continuous options to repurchase the vessels at predetermined prices throughout the bareboat charter period.
Stavros Gyftakis: Upon the completion of the BIRB term, Synergy has an obligation to purchase the vessels for an aggregate amount of approximately $31.5 million. Its financing will bear an interest rate of three-month term SOFR plus 2.55% per annum, representing a sizable reduction of approximately 120 basis points compared to the rate of the refinance agreement.
Speaker Change: Upon the completion of the third synergy has an obligation to purchase the vessels from for an aggregate amount of approximately $31 5 million each financing will bear interest of three months.
Speaker Change: Far plus 255% per annum, representing a sizable reduction of approximately 120 basis points compared to the rates of the refinement agreement in aggregate for the three vessels the financing will amortize over 20 consecutive quarterly installments operating approach.
Stavros Gyftakis: In aggregate, for the three vessels, the financing will amortize over 20 consecutive quarterly installments, averaging approximately $1.3 million per quarter. At the same time, we are in advanced discussions with potential financiers to partially finance the acquisition of our second capsized vessel, securing favorable terms for Synergy and minimizing the impact on our liquidity for the completion of this acquisition. The new financings and refinancings are expected to minimally affect Synergy's loan-to-value, kept at a modest 43% based on the current market value of our fleet and in line with our financing strategy. It is worth noting that Synergy does not have any balloon payment due until the second quarter of 2025.
Speaker Change: Maybe $1 3 million per quarter at the same time, we are in advanced discussions with potential finance here's to partially finance the acquisition of a second capesize vessel, securing favorable terms for synergy and minimizing the impact on our liquidity for the completion of this acquisition the new financings.
Speaker Change: Financing are expected to minimally effective loan to value kept at a modest 43% based on the current market value of our fleet in line with our financing strategy. It is worth noting that synergy does not have any balloon payments view until the second quarter of 2025.
Stamatios Tsantanis: Considering our proactive hedging activities, with several index-linked charters having been converted to fixed, as discussed earlier by Stamati, combined with our prudent financing strategy, we expect consistency on the profitability and liquidity fronts in the next quarter. This can enable us to continue delivering value to our shareholders and rewarding their investments. This concludes my review. I will now turn the call back to Stamatis, who will discuss the market and industry fundamentals.
Speaker Change: Considering our proactive hedging activities with several index linked charters, having been converted to feature as discussed earlier by Marty combined with our prudent financing strategy, we expect consistency in the profitability liquidity, France in the next quarter. This can enable us to continue delivering value to our shareholders and rewarding.
Speaker Change: Investment.
Speaker Change: This concludes my review I will now turn the call box commodities who'll discuss the market and industry fundamentals the market. Thank.
Stamatios Tsantanis: Thank you, Stavros. For the first quarter of 2024, the Cape Size market remained at elevated levels in continuation of the strong market conditions seen in the fourth quarter of the previous year. The strong start runs contrary to the usual seasonality and was driven by increased on-mile demand during a time when the supply of ships has been restricted, both due to the low new building orders in the previous years and restricted traffic through the Panama and Suez Canals.
Speaker Change: Thank you <unk> for the first quarter of 2010 before the Capesize market remained at elevated levels in continuation of the strong market conditions seen in the fourth quarter of the previous year.
Speaker Change: Strong start runs contrary to the usual seasonality and was driven by increased ton mile demand during a time when the supply of ships has been restricted both due to the low new building ordering in the previous years and are restricted traffic through Panama and Suez Canal, Brazil.
Stamatios Tsantanis: Brazilian iron ore exports rose more than 10% compared to last quarter as Valen managed its highest export rate since 2019. China's port iron ore stockpiles reached a low point in 2023, driving demand for imports basically restocking and leading to an increase of about 7.2% year-on-year in 2024. Additionally, coal imports rose by around 13% during a period of low domestic production.
Speaker Change: Brazilian iron ore exports rose more than 10% compared to last quarter as a value and manage its highest export trade since 2019, China's port iron ore stockpiles reached a low point in 2023 driving demand for imports restocking basically and leading to an increase of <unk>.
Speaker Change: Seven 2% year on year in 2010 before.
Speaker Change: <unk> coal imports rose by around 13% during a period of low domestic production for the current year. China's steel production is expected to remain at high levels seen in 2023 with demand driven mainly by our manufacturing infrastructure and that is a global thing and exports amidst a continuing weak.
Stamatios Tsantanis: For the current year, China Steel production is expected to remain at high levels seen in 2023, with demand driven mainly by manufacturing, infrastructure, and that's a global thing, and exports amidst a continuing weak real estate market. Outside China, steel production in the rest of the world has been particularly strong over the past six months, lending support to iron ore and capesize demand, a trend that is expected to continue during the current year. Similarly, Indian coal-generated electricity reached record high levels in the first quarter, building on a positive trend playing out over the past few years.
Real estate market outside China steel production in the rest of the world has been particularly strong over the past six months lending support to iron ore and Capesize demand a trend that is expected to continue during the calendar year. Similarly Indian coal generated electricity reached a record high levels in the first quarter building on it.
Stamatios Tsantanis: Moving on to bauxite, that has had a substantial effect on complementing iron ore cargoes for capesize vessels. Projections for aluminum demand are generally supportive for the next year due to healthy manufacturing trends globally, while longer-term aluminum is also likely to play an important role in the energy transition. Volume growth is expected to be 8% and 5% higher, respectively, in 2024 and 2025, with the tonne-mile effect being even larger as the share of long-term Western African cargoes expands.
Speaker Change: Fifth trend playing out over the past few years moving on to bauxite that has had a substantial effect and complementing iron ore cargos for capesize vessels projections for aluminum demand generally supportive for the next year due to health and manufacturing trends globally, one longer term.
Speaker Change: Aluminum is social likely to play an important role in energy transition volume growth is expected to be 8% and 5% higher respectively. In 2024, and 2025 with a ton mile effect being even larger as a share of long term Western African cargoes.
Speaker Change: <unk> expense beyond the specific capesize demand the general dry bulk market has also been supported by strong grain and coal cargo flows amidst the disruption of ship traffic symbolic in Panama Mcas canals that Etsy. This has had a positive psychological effect on our market as well on top of the margin.
Stamatios Tsantanis: Beyond the specific capesize demand, the general dry bulk market has also been supported by strong grain and coal cargo flows amidst the disruption of ship traffic seen both in Panama and the Suez Canals, in the Red Sea. This has had a positive psychological effect on our market as well, on top of the marginal improvement in actual market balance. Overall, 2024 tonne-mile demand growth for capesize cargoes is expected to be about 3% to 4% higher, and given the current momentum, demand is expected to rise in 2025, with projected tonne-mile growth of at least 2.5%. Turning on to vessel supply, the order book for capesize vessels is at one of the lowest points seen in more than 20 years.
Speaker Change: Improvement in natural market balance of around 2024 ton mile demand growth for the Capesize cargoes is expected to be about 3% to 4% higher and given the current momentum and demand is expected to rise in 2025 with projected ton mile growth by at least two 5% turning around.
Speaker Change: Supply the order book for Capesize vessels is it one of the lowest points seen in more than 20 years overall net capesize fleet growth is expected to be around one 5% in 2024 and 12% in 2025, very low which is considerably lower than the respective ton mile.
Stamatios Tsantanis: Overall, net cape size flip growth is expected to be around 1.5% in 2024 and 1% in 2025, very low, which is considerably lower than the respective ton-mile demand growth figures. This is already reflected in the second-hand and new billing vessel prices that have risen steadily since last year, as well as the healthy time-charter market rates that charterers are willing to pay. Before I conclude, I just want to note that we are, of course, aware of George Economos' investment in Synergy and his subsequent complaint against the company and its board of directors.
Speaker Change: <unk> growth figures. This is already reflected in the second hand, and new building vessel prices that have risen steadily since last year as well as the healthy time charter market rates that the charters are willing to pay.
Before I conclude I just want to note that we are of course aware of total economic investment in synergy and subsequent complaint against the company and its board of directors at synergy our priority is executing our strategy and creating value for our shareholders. Indeed as demonstrated by our results today the actions we're taking.
Stamatios Tsantanis: At Synergy, our priority is executing our strategy and creating value for our shareholders. Indeed, as demonstrated by our results today, the actions we are taking have us well positioned to capture opportunities and reward shareholders both today and in the long term. Our board and management team will continue taking actions that we determine to be in the best interests of our company and our shareholders. To that end, we are addressing Mr. Economos' complaint as appropriate.
Speaker Change: <unk> is well positioned to capture opportunities and reward shareholders. Both today and in the long term our board our management team and will continue taking actions that we determined to be in the best interest of our company and our shareholders to that end, we are addressing Mr. Economou complain as appropriate that said we are here today to talk about our financial results attached.
Stamatios Tsantanis: That said, we are here today to talk about our financial results and our strategies, and that's it. To close today's call, we want to emphasize our aim to balance our strategic objectives of rewarding shareholders, taking advantage of accretive growth opportunities, and maintaining a strong balance sheet. We view this approach as the most appropriate to serve the long-term interests of our shareholders when considering the inherent cyclicality of our industry and future capital expenditures dictated by fleet renewal requirements amidst an ever- changing environmental regulatory landscape.
Speaker Change: Strategies and assets to close today's call, we want to emphasize our aim to balance our strategic objectives of rewarding shareholders, taking advantage of attractive growth opportunities and maintaining a strong balance sheet. We view this approach as the most appropriate to share over the long term interest of our shareholders well considering.
Speaker Change: The inherent cyclicality of our industry and future capital expenditures dictated by fleet renewal requirement amidst an ever changing environmental regulatory landscape with this in mind, we declared one more special dividend. While we ended the first quarter of the year with a loan to value ratio of approximately <unk>.
Stamatios Tsantanis: With this in mind, we declared one more special dividend while we ended the first quarter of the year with a loan-to-value ratio of approximately 40 percent, a level which we view as very sustainable through any market cycle. In addition, the actions we have taken to grow our fleet substantially over the past three years with quality assets have strengthened our financial position, which has put Synergy in a prime position to benefit from a healthy freight market as the Cape Side segment enjoys the best demand and supply fundamentals in a dry bulk space.
Speaker Change: 40% level for which we view very sustainable through market cycles.
Speaker Change: In addition to the actions we have taken to grow our fleet substantially over the past three years with quality assets has strengthened our financial position, which has put synergy in a prime position to benefit from a healthy freight market as a capesize segment enjoys the best demand and supply fundamentals and the dry bulk space.
Speaker Change: As a result, we expect to generate significant cash flows that will facilitate further shareholder value creation moving forward.
Stamatios Tsantanis: As a result, we expect to generate significant cash flows that will facilitate further shareholder value creation moving forward. That concludes our remarks, and I would like now to turn the call over to the Operator to answer any questions you may have. Operator, please take the call. Thank you.
Speaker Change: That concludes our remarks, and I would like now to turn the call over to the operator to answer any questions. You may have operator, please take the call. Thank you.
Operator: Thank you. As a reminder, to ask a question, you need to press star, 1, 1 on your telephone keypad and wait for a name to be announced. Please stand by while we compile the Q&A roster. This will take a few moments.
Speaker Change: Thank you as a reminder to ask a question in each breath, one Bob on your telephone keypad and bank finance will be announced this time, Bob will compile the Q&A roster. This will take a few moments.
Speaker Change: Now, we'll go and take our first question.
Speaker Change: And this comes from the line of Tate Sullivan from Maxim Group. Your line is open. Please ask your question.
Operator: Great. Good day. And yeah, great, great.
Speaker Change: Good day and a great.
Tate H. Sullivan: Great Great comments, great sequential increase in that special dividend.
If I may start on the forward hedging strategy with Q2 looking like another quarter over quarter increase in the time charter equivalent rate with what you've done. So far have you seen stable FSA is for the second half of 2024.
Speaker Change: I cannot comment on what Youre seeing or what your activity has been so far for <unk>.
Stamatios Tsantanis: Well, good morning Tate. It's great to hear from you. The thing is that the FFA from time to time is moving completely irrationally and doesn't reflect the real underlying value of the freight rates. So from time to time, we're seeing spikes in the FFA, and when we see these spikes, you know, right now, we have fixed 30% of our freight for the second half at around $30,000 a day. So whenever we see those spikes, we are there, and we're ready, and we usually take advantage of those opportunities. And we are. So we were pretty much at the same levels of the BCI for Q1, and we expect to be above the BCI in Q2, and you know, as long as we generate and secure a very hefty profit for the second half of the year, I believe it doesn't really matter whether you're a bit
Speaker Change: Well good morning, Tate great to hear from you.
Speaker Change: The thing is.
Speaker Change: From time to time is moving completely irrational it doesn't reflect the real underlying value of the freight rates. So from time to time, we are seeing.
Speaker Change: In the FSA and when we see these spikes right now we have fixed.
Speaker Change: 30% of that several of our fleet actually for the second half at around 31000 Boes a day. So whenever we see those spikes we have Erin we are ready and we usually take advantage of those opportunities that are not <unk>. So we were pretty much the same levels of the PCI for Q1, we expect to be above that.
Speaker Change: Q2, and Gil as long as we generate and secure very healthy prospects for the second half of the.
The year I believe it doesn't really matter, whether you are a bit above or below the blue sky, but the most important thing is that we have a very dynamic.
Speaker Change: Strategy. So whenever we see that we monitor very carefully we'll just take advantage of the spikes in women walk to simple as that.
Stamatios Tsantanis: And then, I mean, it seems like quite good visibility going into 2025, given the net cape size growth you mentioned of 1% in 2025 and good ton-mile growth. And there have been some other shipping companies, as of yesterday and this morning, talking about more scrapping in 2025. Is that going to take place in the cape size market too? And have you already done that?
Speaker Change: Great and then I mean, it seems like quite good visibility going into 2025.
Speaker Change: Given the net Capesize growth, you mentioned of 1% and 25 in good ton mile.
Speaker Change: And there have been some other shipping companies after the close yesterday and this morning talking about more scrapping and 25% is that going to take place in the Cape size market.
You're already seeing that.
Stamatios Tsantanis: Well, the Cape Size segment has had the lowest order book in the last 20 plus years. We have seen some pick-up in new building ordering in the last six months, but this has not happened in the Cape Size segment. Cape Size segment ordering has been quite subdued, and we don't really expect, due to the very big price differential between the second-hand and the new building, we don't really anticipate any immediate orders. And even if it does, there are no slots available before 27 or even 28.
Speaker Change: Well the Capesize segment has the lowest order book over the last 20 plus years.
Speaker Change: We have seen some pickup in new building ordering.
Six months, but.
Speaker Change: This has not happened in the Capesize segment Capesize segment ordering has been quite subdued and don't really expect due to the very big price differential between the secondhand buildings don't really anticipate any immediate and even if it does there are no slots available before 'twenty seven or even 2008.
Stamatios Tsantanis: So I don't really expect any additional Cape Sizes to be ordered or delivered anytime soon, and that is going to help the market a lot, given the fact that two miles are doing very well. There are always geopolitical incidents happening that are, most of the time, beneficial to the trade. Not so beneficial for humanity, but you know, beneficial for the trade. I think that it's going to drive a sustainable profit stream that is going to deliver good returns to our shareholders.
Speaker Change: So I don't really expect any additional Cape sizes.
Speaker Change: <unk> delivered anytime soon and that is going to help the market given the fact that the values are doing very well.
Speaker Change: Always geopolitical incidents happening that.
Speaker Change: Most of the time, it's beneficial to the trade and also beneficial for humanity, but beneficial for the trade and.
Speaker Change: I think that is going to drive a sustainable profit stream that is going to deliver good returns to our shareholders. So that's all I can say and as we have so many times when the revenues and the cash flow is good we always take care of our shareholders and we give back so.
Stamatios Tsantanis: So that's all I can say. And as we have pledged so many times, when the revenues and the cash flow are good, we always take care of our shareholders, and we give back. So with a higher degree of certainty in the cash flow stream, we will continue rewarding our shareholders to the best of our capacity.
Speaker Change: With higher degree of certainty of the cash flow stream will continue rewarding our shareholders with the best of our.
Speaker Change: Possibly.
Stamatios Tsantanis: Just one follow-up is, are there, certainly not your fleet, but are there other Cape-sized ships in the market that are still transporting cargo that is greater than 20 years older? And just, can you comment on this, Brad?
Speaker Change: Okay, just one follow up.
Speaker Change: They're certainly not your other are there other capesize ships in the market that are still transporting cargo that are greater than 20 years older.
Speaker Change: And just can you comment on the scrapping activity.
Stamatios Tsantanis: A parallel example is that of the tankers. When the tankers spiked a couple of years ago, after the invasion of Russia into Ukraine, even older ships built in 2004, 5, 6, were actually trading at significantly six-digit freight rate levels. So when the market is good and there is not an availability of supply of vessels, even the older ships trade quite well. So I'm aware of certain fixtures right now for 20-year-old vessels, older than 20-year-old vessels, that are in the region of $25,000, $23,000 to $25,000. I mean, even the older vessels are trading quite well. You know, demand additional ships; you're not going to find them in buildings because there are not enough.
Speaker Change: I will give the parallel example is one of the tankers when the tanker spiked a couple of years ago. After the invasion of Russia and Ukraine.
Speaker Change: Even older ships built in 2456, we're actually trading significantly six digit affiliate rate level. So.
Speaker Change: When the market is good and there is.
Speaker Change: Not availability of supply of vessels, even the older ships trade quite well, so I'm aware of certain fixtures.
Speaker Change: Right now for 20 year old vessels older than 20 year old vessels that are in the region of 25.
Speaker Change: $75000.
Speaker Change: It's quite good I mean, even at the older vessels trading quite good and I believe that.
Speaker Change: If the market.
Speaker Change: Demand additional ships you are not going to high level buildings, because there are not enough.
Stamatios Tsantanis: Well, thank you very much. Look forward to talking more. Thanks, Tumar. Thank you, Tate. We look forward to your show.
Speaker Change: Great. Okay, well. Thank you very much look forward to talking to Mark. Thank you Tait with up to yourself.
Speaker Change: Thank you.
Operator: Now we're going to take our next question, and the question comes from the line of Liam Burke from B Raleigh Financial. Your line is open. Please ask your question.
Speaker Change: Now we're going to take over next question.
Speaker Change: And the question comes from the line of Liam Burke from B Riley Financial Your line is open. Please ask your question, Yes tell us demand is highest.
Stamatios Tsantanis: Hello, Stamatios. Hi, Stavros. How are you? A lovely and good morning. Good morning. Stamatios, you talked about the macro. You went through iron ore and bauxite. Is coal going to be a positive or a negative thing for you for the balance of 2024?
Speaker Change: How are you.
Speaker Change: Hi, Elliot and.
Speaker Change: Good morning.
Speaker Change: Good morning.
Speaker Change: So modest you talked about the macro.
Speaker Change: Went through the iron ore and bauxite is call going to be a positive.
Speaker Change: For you.
Speaker Change: For the balance of 2024.
Stamatios Tsantanis: Yes, it is, and we're seeing very strong volumes, which is the result of two main factors. Number one, you have higher energy needs in Southeast Asia, as well as India, which relies heavily on coal. You have a mega delivery of coal-fired power plants in Southeast Asia again, and India, which is going to be driving their energy capacity and needs for the next five years with brand new factories. So we don't really see coal slowing down.
Speaker Change: Yes, it is and we're seeing very strong volumes.
Speaker Change: As a result of two main factors number one you have tighter energy needs today and in southeast Asia, as well as India, which relies heavily on coal you have a gap.
Speaker Change: Very of coal fired power plants in southeast Asia, and India, which is going to be tightened their energy.
Scott: Capacity and needs for the next five years brand new factories. So we don't really see coal slowing down what does it really help the coal trade a lot and we're seeing that on our own fleet is the fact that actually passengers are now Scott. So all the coal going from Australia to Europe, and we've had a lot of these trades.
Stamatios Tsantanis: What has really helped the coal trade a lot, and we're seeing that on our own fleet, is the fact that the red sea passages are now scarce. So all the coal going from Australia to Europe, and we've had a lot of these trades, it now has to go around the Cape of Good Hope, so it doesn't, you know, cut a road inside the Mediterranean Sea. As you can imagine, that increases the tonnemile
Scott: I'll have to go around the Cape of good hope so it doesn't cause.
Scott: Capital in size.
Scott: As you can imagine that increases the ton mile.
Stamatios Tsantanis: So demand by itself will continue to be strong. We don't see demand slowing down. And the Tonmile effect due to geopolitics is actually helping the market a lot. So it isn't going anywhere.
Scott: Demand Bechtel will continue to be strong, we don't see demand slowing down and ton mile effect due to geopolitics is actually helping in the market a lot. So it isn't going anywhere new factories, helping build that a cleaner better and developing world.
Stamatios Tsantanis: New factories have been built that are cleaner and better. And, you know, developing world and so fast accelerating growth economies like India need a lot of energy. Where are they going to find it?
Speaker Change: First accelerating growth economies like India, they need us.
Stamatios Tsantanis: Cannot build nuclear plants in five years, or you cannot put windmills all over the place. You need energy, and you need, you know, electricity. And coal is the most abundant and cheapest form for electricity to happen. And I think that we will see that going on for the foreseeable future.
Speaker Change: What are you going to find it cannot build nuclear plants, even five years ago, you cannot like wind mills all over the place you need energy and unit.
Christie: Christie and coal is the most abundant in simplest form for electricity.
Christie: I think that we will see that going on for the foreseeable future.
Stamatios Tsantanis: Great, and I should know this, but you gave guidance or your partial guidance for your fixtures for the second half of the year. Do you have any dry docking scheduled in the second half to, you know, that would affect utilization rates?
Christie: Great.
Christie: No.
Speaker Change: You gave guidance on your partial guidance for your fixtures for the second half of the year do you have any dry docking scheduled in the second half.
Speaker Change: That would impact utilization rates.
Stamatios Tsantanis: We have a couple of ships, so it's not really a big dry dock program for the second half of the year. It's a couple of ships that will likely finish very quickly. We are in discussions with the charterers of these ships to install energy-saving devices and paints and all that. That is going to require a little bit of additional time and a little bit of additional cost that we're now discussing how to split. But this is not going to have a substantial effect on our P&L for the second half of the year. If it continues like this, it's going to be pretty much as expected.
Speaker Change: Have a couple of ships so it's not really a big Red Hawk.
Speaker Change: Not really pick dry bulk.
Speaker Change: Program for the second half of the year, it's a couple of ships.
Speaker Change: We'll likely finish very quickly we are in discussions with the charterers of these ships to install energy saving devices in paints and all that that was going to require a little bit additional time and a little bit additional costs that we are now discussing how to split it but this is not going to be substantial.
Speaker Change: The effect on our P&L for the second half of the year.
Speaker Change: If it continues like this it's going to be.
Stamatios Tsantanis: Got it. And I know this sounds kind of nitpicking, but DVOE was slightly up, both sequentially and year-over-year. Is that just a normal cost of operations?
Speaker Change: Pretty much as expected.
Speaker Change: Got it.
Speaker Change: This sounds kind of.
Speaker Change: Picking but tivo dvoa was slightly up.
Speaker Change: Sequential and year over year.
Speaker Change: Is that just normal cost of operations.
Stamatios Tsantanis: That's a great question and I think I should address it, you know, right now for good. From the public shipping drywall companies, Seanergy has the lowest book value per deadweight, which means that we have bought our ships cheaper than the majority of the other companies, right? Sometimes the ships require additional maintenance. So we have paid less for the ships, but we need a bit more expenditure to maintain them better. So it's not a matter of, you know, it's not a matter of, how do you say, often inflation or things like that.
Speaker Change: That's a great question and I think I should address it.
Right now.
Speaker Change: Good.
Speaker Change: From the public shipping dry bulk companies synergy has the lowest book value per deadweight, which means that we have put our ships cheaper than the majority of the companies right.
Speaker Change: Sometimes the ships will require additional maintenance. So we have paid less for the ships, but we need a bit more expenses to maintain the better so it's not a matter of.
Speaker Change: So it's not a matter of.
Speaker Change: How do you take inflation on things like that on top of that.
Stamatios Tsantanis: On top of that, the regulations in the regulatory environment in dry bank space, especially on capes that we call Australia a lot and now China, have become much more demanding, which means that you cannot really cut down on crew costs, which is the biggest component of direct voyage operating expenses. Sorry, direct operating expenses. And that means that we need to invest in seafarers that are of higher quality to avoid delays, to avoid detentions, to avoid, you know, losing operational days.
Speaker Change: Installations in the regulatory environment in dry bulk space, especially the capes that will call Australia, a lot and now China has become much more demanding which means that you cannot really cut down on costs, which is the biggest component of direct mortgage operating expenses sort of direct.
Speaker Change: Operating expenses and that means that we need to invest on seafarers that have the higher quality to avoid delays to avoid potential store growth.
Stamatios Tsantanis: So that's something that, as a company, we examine and we assess on a weekly basis when we discuss the fleet. The saving of buying our ships cheaper is much, much higher than the actual incremental operating expenses cost, which is nothing compared to how much money we have saved for the shareholders in costs and how much more money we generate on revenues from additional units that we're buying. Great. Thank you.
Speaker Change: Losing operational days, so that's something that as a company.
Speaker Change: Examining and we assess on a weekly basis, when we discuss about the fleet. So.
Speaker Change: Saving of buying a cheaper is much much higher than the actual incremental operating expenses cost, which is nothing compared to how much bandwidth.
Speaker Change: We have say for our shareholders.
Speaker Change: Cost and how much more myeloid, we generate revenues from additional units at <unk> Bank.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Operator: Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Now we're going to take our first question, and it comes from the line of Christopher Bartheskaya from Arctic Securities. Your line is open, please ask your question.
Speaker Change: Dear participants as a reminder, each wish to ask a question over the phone. Please press star one on your telephone keypad.
Speaker Change: Now we will go and take our first question.
Speaker Change: And it comes from the line of Christopher <unk> from Arctic Securities. Your line is open. Please ask your question.
Operator: Hello, how are you?
Christopher <unk>: Hello or synergies.
Operator: Hello. Good afternoon. We're great. Thank you. Nice to hear from you.
Speaker Change: Alright.
Speaker Change: Hello, Good afternoon were great. Thank you nice to hear from you.
Operator: I must hear you as well and thank you for the good presentation and especially a really good quarter both operationally, I mean it's beat across all parameters. I was wondering, could you please elaborate a bit on distribution? You're now paying 30 percent of EPS; is this sort of a new normal, or how should we think about distributions going forward? I mean, we're still trading quite significantly below NAV, so how do you weigh that up against FARBAC?
Mercer carriers: Mercer carriers, Hello, and thank you for your presentation.
Speaker Change: This fiscal year.
Speaker Change: Really good quarter bolt.
Speaker Change: <unk>.
Speaker Change: I mean, it's speeds across all power matters.
Speaker Change: I was wondering could you please elaborate a bit.
Speaker Change:
Speaker Change: <unk> you are now paying Cherokee present folks.
Speaker Change: Etfs.
Speaker Change: So unused normal or how should we think about distributions going forward I mean, you're still getting.
Speaker Change: And quite significantly below an IV, so how do you weigh that.
Speaker Change: Again.
Speaker Change: Sorry Max.
Stamatios Tsantanis: Well, as you know, we have been rewarding our shareholders quite significantly over the last two years since we initiated the dividend schedule. We discontinued that for a temporary period of time last year due to bad market conditions when we saw the CAPE rates going down to $3,000 a day. We are conservative people, and the more we fix and the more certain we feel about the cash flow, the more our appetite is to reward our shareholders more and more.
Speaker Change: Well as you know.
Speaker Change: We have been a rewarding our shareholders quite significantly over the last two years that we have initiated the dividend the schedule, which is convenient that for a temporary period that last year Q2.
Speaker Change: But market conditions, when we sold the Cape rates going down to $3000 a day.
Speaker Change: We are conservative people the more we fix and the more acceptance we feel about the cash flow the more our appetite is to reward our shareholders.
Stamatios Tsantanis: So, we started with $0.10 in Q1. We're now doing $0.15 in Q2. We hope that, if the market allows, we will continue to expand the dividend payout as much as possible. We don't have any imminent acquisition opportunities, and the ones that we have agreed to acquire have already been pretty much funded. So, we don't have any serious outflows here and there. Having said that, we will, of course, need to have a good cash cushion to avoid any mishaps in the market. As you know, it's a very volatile trade. We will continue our generosity to reward our shareholders because we want to, and we feel obliged to provide the best possible returns for the shareholders of Seanergy.
Speaker Change: More and more so we started with 10 cents in Q1, we're not doing 16 in Q2, we would hope that if the market allows we will continue to expand the dividend payout as much as possible.
We don't have any imminent acquisition opportunities and the ones that we have agreed to acquire have already been pretty much funded so we don't have any cdos outflows calendar, having said that we will of course need to have a good cash cushion to avoid any risk to the market as you know, it's a very volatile.
Speaker Change: And we will continue our generosity to reward our shareholders because.
Speaker Change: We want to and we feel obliged to providing the best possible potential shareholders opportunity.
Stamatios Tsantanis: Great, great, got it. And in terms of the refinancing and also with regard to the acquisition, it's quite a low and attractive margin you're getting now, 255, so I guess that should have a positive effect also in terms of net financials, but sort of into Q2 and maybe Q3, how's the cash effect in terms of the refinancing?
Speaker Change: Right got it.
Speaker Change: And in terms of.
Speaker Change: Refinancing animals, so with regards to that.
Speaker Change: Acquisition.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Low and attractive margin, you're getting now $2 55, So I guess your.
Speaker Change: That should have a positive.
Speaker Change: Also certain national spot.
Speaker Change: Into Q2.
Speaker Change: And maybe Q3 or how is the cash effect in terms of these refinancings.
Stamatios Tsantanis: Oh, we speak the name of Europe. We expect basically to minimize the basically new 5E equity component in the acquisition of the ship of the ICON ship. So basically, it's like we're buying here with no more equity. And then there's a small equity injection that we need to do for the newer ship that we have agreed to acquire during this quarter, which is around, I don't know, around $6 million on top of the advance that we have already paid in the balance. Will be covered by debt.
Speaker Change: We expect.
Speaker Change: Following very financially, we expect basically to minimize basically newly five equity.
Speaker Change: Component in the acquisition of the shape of the icon shaped so basically it's like we're buying here.
Speaker Change: With no no more equity and then there's a small equity injection that we need to do.
Speaker Change: For the newer ships that we have.
Speaker Change: Agreed to acquired during this quarter, which is around I don't know how their own.
$6 million on top of the advances with our database and the balance will be.
Speaker Change: Covered bye bye bye debt, so we don't expect.
Stamatios Tsantanis: So we don't expect significant outflows to cover the capital for the acquisition of these two ships. And as Stamatios said, as the market stabilizes and we see that there are more opportunities for long-term fixed rates, fixed at good rates, dividends will go up.
Speaker Change: Significant outflows to cover the Capex for the acquisition of those two ships and as Tom said.
Speaker Change: The market stabilizes and we see that there are more opportunities for long term fixed rate fixture at good rates dividend will go up.
Stamatios Tsantanis: And the last question from me, with regard to the market, what are you seeing as a tomahawk effect or Booster going into Q3 and Q4, or is it still sort of..., healthy volumes from Brazil, or do you see any other volumes that are? I'll just mark it forward.
Speaker Change: Alright.
Speaker Change:
Speaker Change:
Speaker Change: Okay.
Speaker Change: Last question for me.
Speaker Change: With regards to the market.
Yeah.
Speaker Change: What are you seeing so all of our trials.
Speaker Change: Uh huh.
Speaker Change: Alright, Easter going into Q3 Q4 or is it.
Speaker Change: Sort of.
Speaker Change: Healthy volumes from from Brazil, or do you see any other.
Speaker Change: So far.
Mark: This is mark.
Mark: Forward.
Stamatios Tsantanis: Well, as a benchmark, 2023 was a very strong year. If we managed to have the same volumes in 2024, that's also going to be awesome, considering the fact that we have the Red Sea passage closure that has decreased the amount of supply of ships in the water. And that is going to escalate even more because the longer the distances, the greater the backlog of required supplies that you're going to need later in the year.
Mark: Yes.
Speaker Change: Well, we as evidenced by 2023 last year was a very strong year. If we manage to type the same volumes in 2024, that's also going to be able to push them. Considering the fact that we have to be at etsy facets closure that has increased.
Speaker Change: The amount of supply of ships in the water, so and that is going to escalate, even more because the longer distances the more the backlog of.
Speaker Change: Our required supply that you're going to need later in the year of course geopolitics are favorable for the industry or sometimes they are not I mean, we.
Stamatios Tsantanis: Of course, geopolitics is favorable for the industry, or sometimes it's not. I mean, you know, we saw a certain period in the beginning of 2023, if you remember, when all the locked supply was unwound in the sea, and there were no delays. So we may see that as well. Overall, I believe that the demand and supply fundamentals are very favorable. But due to all these aberrations in supply, we might see shrinks, either on the high side or on the low side.
Speaker Change: So certain period in the beginning of 2023.
Speaker Change: You remember that all the.
Speaker Change: Locke supply was unwound in the C and although delays so we may see that as well overall I believe that the demand supply fundamentals are very favorable.
Speaker Change: Due to all these operations.
Operator: So that's the name of the game when you're trading on a case. Perfect. Thanks a lot. Thank you. Have a good afternoon.
Speaker Change: In supply we might see.
Speaker Change: Shrinks either on the high side or on the low side. So that's the name of the game when you are trading on the capes.
Speaker Change: Okay.
Speaker Change: Perfect.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: There are no further questions for today. This concludes today's conference call. Thank you for participating. You may now all disconnect. Stickers, please stand by.
Speaker Change: Okay.
Speaker Change: There are no further questions for today. This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
Operator: Thank you, Nadia. Thank you.
Andrea: Thank you Andrea Thank you.
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