Q1 2025 Seanergy Maritime Holdings Corp Earnings Call
Thank you for standing by ladies and gentlemen, and welcome to the synergy Maritime Holdings Corp Conference call on the first quarter ended March 31st 2025 financial results, we have with US Mr. So much it's some tonnage chairman and CEO and Mr stuff as gifts.
Speaker Change: Chuck is chief financial Officer of Sienna Senior Jeep Maritime halting scope.
Speaker Change: At this time all participants are in a listen only mode. There will be a question and answer session at which time, if you would like to ask a question.
Please press star one one on your telephone keypad and you will then hear an automated message atlassian that Johan just rice.
Be advised that this conference call is being recorded today Tuesday may 27th 2025, the archived webcast of the conference call will soon be made available on this synergy website www dot synergy maritime does come under the webcast and presentation section on that it necessarily.
Asian stage.
Many of our remarks today contain forward looking statements based on current expectations actual results may differ materially from the results projected from those forward looking statements additional information concerning factors that can cause the extra results to differ materially from those in the forward looking statements is contained in the.
Speaker Change: First quarter ended March 31st 2025, earning release, which is available on the synergy website again www Dot C energy Maritime Dot Com I would now like to turn the conference over to your one of your speakers today, Chairman and CEO of the company Mr. Somebody some tonnage. Please go ahead.
Speaker Change: Sure.
Yeah.
Speaker Change: Thank you operator.
Welcome everyone.
Speaker Change: They were going to be presenting our financial results and company updates for the first quarter of 2025.
Following a year of record financial performance significant shareholder rewards and targeted fleet expansion synergy entered 2025 with strong momentum and a clear strategic vision, we position the company to fully leverage the positive long term fundamentals of the capesize market and our access in the first quarter every year.
Speaker Change: Reflect our continued commitment to disciplined growth balance sheet strength and delivering value to our shareholders. Despite the softer earnings environment in the first quarter our conviction on the long term strength of the Capesize segment remained unchanged the markets core supply and demand fundamentals remain intact.
Speaker Change: And this confidence is reflected in our board's decision to declare a dividend of five cents per common share.
Payout exceeded what our formula would typically dictate but the board acted decisively to uphold our commitment to consistent shareholder returns even during temporary market softness.
Subsequent rebound in spot capesize rates to normalized levels. Further supports this decision and our market outlook turning to our financial results in the first quarter of 2025, we recorded revenue of $24 2 million EBITDA of $6 6 million and a net loss of $6 8 million.
As of quarter end, our cash balance stood at $31 million.
Despite the quarterly loss I want to emphasize the strength and flexibility of our balance sheet, which positions us to ramp up capital at the times are the Capesize market continues to recover.
On the operational front in February we took delivery of two high quality Japanese built capesize vessels. The blue chip built in 2011 at mature shipbuilding in Japan was acquired by a six month bareboat charter and has commenced employment with a first class operator.
Index linked charter contract plus FX premium.
The may ship, a larger new customer Max built in 2013 at Barrick's Shipbuilding of Japan was acquired through a combination of cash and bank financing and it's also employed with a first class operator.
Our contract offering index linked hire with a guaranteed profitable floor.
Both acquisitions were consistent with our focus on modern fuel efficient Japanese tonnage secured at favorable terms and delivering immediate cash flow visibility on the financing front during the quarter. We concluded two separate transactions totaling $88 $1 million with proceeds used to be.
Finance the existing debt of four vessels and to fund the acquisition of the mix. It. We're pleased with the timely execution of these deals completed that improved pricing and tariffs. These refinancings effectively remove all debt maturities for the next four quarters, enabling us to focus on capital.
And market opportunities.
From a commercial standpoint, we achieved a daily time charter equivalent of 13400 in Q1, 2025 about 3% above the Baltic Capesize Index average once again validating our commercial strategy.
Speaker Change: Our guidance. However for Q2 stands at approximately $19100 based on the prevailing FFA curve as of May 23rd a strong quarter on quarter improvement that should support a return to normalized capital distributions.
Speaker Change: Also acted decisively to manage forward visibility.
Speaker Change: <unk>, 39% over fleet operating days for Q2 are hedged at an average rate of approximately 22000 and $700. In addition, we have secured long term coverage for roughly one third of our available days throughout the end of the year at an average daily rate exiting 2002.
Speaker Change: <unk>.
Speaker Change: These decisions reflect our commitment to securing profitable cash flows while ensuring a high return on capital and maintaining sustainable fleet growth.
Speaker Change: I will now pass the call to establish who will fill you in on our financial information for the quarter as well as discussing our balance sheet and debt refinancings Tableau. Please go ahead. Thank.
Thank you Samantha and welcome to everyone joining us on today's earnings call.
Let's begin with a review of the key highlights from our financial performance for the first quarter ended March 31st 2025.
Our net revenue for the quarter totaled $24 2 million of ATC or 50004 hundred per day compared to $38 3 million TCE of $24100 in the same period last year. However, it's worth stating that OTC still outperformed the Baltic Capesize index.
I think the advantages for hedging within the context of our overall commercial strategy.
Adjusted EBITDA stood at $8 million, while we recorded an adjusted net loss of $5 2 million looking.
Looking ahead, we expect to return to profitability in the second quarter supported by a stronger market and the freight kissing activities discussed previously by so much.
Current estimates indicate a recovery TCE levels to over 19000 per day.
Speaker Change: On the expense side, we have successfully reduced our daily Opex were 7% year over year since you're improving efficiency for ship management team.
Now moving onto our balance sheet, our cash position stood at 51 million.
Despite the soft capesize market and cash outlays for the acquisition of the nation in the Blue chip.
Speaker Change: Cash balance declined only moderately during the quarter.
Speaker Change: This was achieved on the bulk of our proactive financing strategy, which enables a careful balance between liquidity and leverage with active management of our loan book in combination with the consistent strong market evaluation for fleet.
Speaker Change: <unk> financial resilience. It has allowed us to sustain dividend distribution maintain operational flexibility and fund investments in our vessels that are scheduled to go through dry dockings in the coming quarters. Our total assets stands at $603 5 million, while balancing the equity stood at 250.
Speaker Change: $4 8 million, our debt, including liabilities under finance leases amounted to $323 7 million and came to the first quarter, resulting to a loan to value ratio below 50% based on the market environment for fleet, which have remained relatively stable in the last six months.
Speaker Change: So moving forward I'd like to briefly recap our latest financing activities in.
Speaker Change: In February we finalized a new sustainability linked loan with Piraeus bank to refinance existing debt of wood chips and ownership in the significantly improved terms. While also partially funding the acquisition of Macy's. The total amount of the transaction was $53 6 million with five year term and there is interest.
Speaker Change: Rate of 2.5% cluster <expletive> around 55 basis points lower than the rate of the refinements facility.
Speaker Change: May be subject to further reduction based on the achievement of specific emission reduction targets in March we entered into two separate sale and leaseback agreements with Macquarie <unk> friendship with entities affiliated with water on financial leasing totaling $34 5 million.
Speaker Change: The proceeds were used to fund the debt of the respective vessels under our loan facility with Alfa Bank. The vessels were sold and chartered back to on a bareboat basis for a period of five years with celerity retaining continuous purchase options at predetermined prices. Each variable charter also includes a purchase obligation at the end of it.
Speaker Change: The charter period, the financings bear interest at a rate of three months term, so far plus 215% around 130 basis points lower than the average rate of the finance facility at the same time when advance discussions with potential financiers to fund the purchase option price of the Blue chip.
Speaker Change: View later this summer our goal is to secure favorable terms, while minimizing impact on our liquidity.
Speaker Change: Please note important highlight the Trinity has no balloon payments due until the second quarter of 2026 overall, we remain optimistic about the profitability in the coming quarters and confidence in the sense of the flexibility of our balance sheet risk.
Speaker Change: This positions us well to continue delivering on our strategic priorities.
Speaker Change: Fleet growth and meaningful shareholder returns across the market cycle. This concludes my review of our financial results and update I will now pass the call back to Marty who will now discuss the capesize market and industry fundamentals.
Marty: Thanks, Douglas after registering a strong performance in 2020 for the Capesize market experienced a temporary collection in the first quarter of 2025, consistent with historical seasonality, but this time exasperated by severe weather disruptions affecting Australian exports and a strong.
Speaker Change: Inventories built up in 2024, especially I'll call it <unk>.
Speaker Change: Capesize daily charter rates rebounded sharply in March as normal cargo flows resumed the Baltic Capesize index recovering from a low for about $6000 a day to a high of approximately 23000 doors within the same quarter.
Speaker Change: While short term volatility continues to be shaped by cautious economic sentiment and evolving trade policy uncertainty the long term capesize fundamentals remain firmly positive.
Speaker Change: The primary reason is highly constrained vessel supply growth combined with steady and resilient demand for our major dry bulk commodities on the supply side.
Speaker Change: <unk> is a new customer macro order book is currently slightly below 8% one of the lowest levels historically, especially significant given the increasing demand for fleet renewal due to a tightening environmental regulations approx.
Speaker Change: Approximately 10% of the existing fleet is over 20 years old and becoming less and less competitive due to the rising cost of environmental compliance.
Speaker Change: Orders remain limited due to constrained yard capacity higher new building prices and uncertainty about propulsion technology.
Speaker Change: The six new Capesize and your customer charters have in place to year to date compared to <unk> 77 for all of 2024.
Speaker Change: Net fleet growth is expected at just one 5% in 2025 and one 9% in 2026, nothing basically factoring increased drydocking effective growth, maybe even negative during the year.
Speaker Change: Vessel speeds have stayed historically low due to <unk> regulations and are expected to remain subdued further reducing the effective supply.
Speaker Change: Taken together these points to minimal net fleet growth for several years, creating a very supportive environment for Capesize earnings.
Speaker Change: On the demand side global steel demand remains resilient, although China's steel production is nearly flat year on year iron ore imports are growing due to depletion of domestic mines and a pivot towards higher grade imported ore Australia's iron ore exports were disrupted early in the year by severe floodings.
Speaker Change: <unk> for the year to date volumes down two 6% however.
Speaker Change: However, miners have reaffirmed 2025 expert guidance pointing to significant upside for the rest of the year.
Speaker Change: Brazilian iron ore exports are up four 6% a year to date. Despite the high base from Q1 2024, the big export season from May to November is now starting adding to the relevant momentum.
Speaker Change: <unk>, Brazil continue to deliver on efficiency gains and high grade iron ore output, which bodes well for long term export growth since Brazilian cargoes required triple the tonnage of Australian cargos to impact on Cape sizes, and this demand is magnified the simandou iron ore project in Guinea remains.
Speaker Change: On track to start exports in November 2025.
Speaker Change: With one of the lowest cost structures globally Simandou is a game changer and long haul premium grade Capesize exclusive trade.
Speaker Change: It is a key structural opportunity that we intend to capitalize on.
Speaker Change: Iron ore ton miles are expected to grow by about 5% annually in both 2026 and 2027.
Speaker Change: <unk> exports of bauxite are up 43% year to date full year production is expected to reach 200 million tons up from 145 million tons in 2024, driven by aluminum demand thermal coal imports dropped around 8% year to date as inventories.
Speaker Change: Started high and hydro power generation service in China. However.
Speaker Change: However, as stockpiles normalize seasonal demand is expected to rebound in the second half of the year.
Speaker Change: Taken together demand across all major capesize commodities, and raw materials remain robust and well supported by global infrastructure energy consumption and manufacturing needs.
Speaker Change: With extremely low fleet growth and structural inefficiencies such as slow speeds and increased dry dockings capesize utilization is projected to Titan progressively in the quarters ahead.
Speaker Change: To conclude synergy is very well positioned as a pure play Capesize company fully aligned with this long term market tailwind. Our strategy is built on these three pillars capital returns, we remain committed to delivering shareholder value through stable dividends and targeted share buyback.
Speaker Change: Strategic fleet growth or expansion as disciplined and opportunistic focused on aligning with favorable market conditions.
Speaker Change: Balance sheet strength, our capital structure remains healthy and flexible, allowing us to sustain returns and pursue value enhancing opportunities as they arise.
Speaker Change: With these foundations were confident in our ability to maintain our leadership position in the Cape size space.
Speaker Change: On that note I would like to turn the call over to the operator for any questions. You may have operator, please take the call. Thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please first star one one on your telephone.
Speaker Change: For your name to be announced to withdraw your question. Please press star one on <unk>.
Speaker Change: Ken.
Speaker Change: We will now take the first question.
Speaker Change: Yes.
Speaker Change: From the line of Mark Reichman from Noble capital markets. Please go ahead.
Mark Reichman: Yes would you please walk us through the Drydock schedule I mean, we had assumed 50 days in each of the first and fourth quarters 100 days in each of the second and third quarters. So basically 25 days per vessel.
Speaker Change: Alright, good morning, Marc we establish thanks for your question.
Speaker Change: Yes, basically I mean, we have approximately seven seven ships remaining for Drydocking this year.
Speaker Change: Which we're trying to push a couple of ships to the first quarter of next year, depending also on the prevailing market conditions. If the market remains at current levels, we will do as much as possible. This year expecting next year to be a bit stronger.
Speaker Change: <unk>.
Speaker Change: We expect.
Speaker Change: The second third and fourth quarter in total around 10% to $14 million of Capex concerning.
Speaker Change: Dry dockings and around 20 days.
Speaker Change: Days per vessel, we have already dry docked.
Speaker Change: For vessels this year, one in the fourth quarter and two in the second so basically this is what remains.
Speaker Change: Okay, Great. That's very helpful. And then just secondly would you just please elaborate on the company's strategic and capital allocation priorities I mean, I think in the commentary you've mentioned.
Speaker Change: Capital returns.
Speaker Change: And market opportunities and so I was kind of wondering now that you've concluded deliveries of the two new vessels kind of what's next for your fleet.
Speaker Change: Hi.
Speaker Change: It is going to be consistent with last year.
Speaker Change: As you saw that last year, we had the top priority to distribute.
Speaker Change: A very significant part of our cash flow in dividends and we did some buybacks as well and at the same time, we arranged by a few ships. So I believe that 2025, we will also be consistent with do not have anything lined up in respect of further acquisitions.
Speaker Change: Look because we don't want to but because the selection of assets right now is scars and limited. So unfortunately they are not.
Speaker Change: <unk>.
Speaker Change: How do you shape the compelling candidates right now in place.
Speaker Change: But.
Speaker Change: If I were to give a good prediction I would say that we would stay along the lines with last year.
Speaker Change: Well that's very helpful. Thank you very much.
Speaker Change: Youre very welcome have a good day.
Speaker Change: Thank you.
Speaker Change: We will now take the next question.
Speaker Change: From the line of sight to lever from Maxim Group. Please go ahead.
Speaker Change: Hi, guys good day to day off.
Speaker Change: Can you talk about when the ship Opex and good morning.
Speaker Change: When the opportunity is to buy it.
Speaker Change: Are you competing against.
Speaker Change: So much for taking the household large mining company or something.
Speaker Change: Got it.
Speaker Change: At the market.
Speaker Change: Well, we are fortunate to have.
Speaker Change: Some kind of a right of first offer on a number of ships that are potentially available for sale or purchased by us. So thats very helpful. In the event that we have these opportunities and thus far as the commercial.
Speaker Change: Agreements were also fortunate to have some key partners that are ready to provide us with lucrative.
Speaker Change: Agreements for chartering the ships. So in both cases, thanks to all of these long standing relationships, we have with <unk>.
Speaker Change: A number of potential sellers as well as commercial operators and charters, we have the ability to buy in charter ships as we have proven very successful.
Speaker Change: As a testament to that is the tour itself purchases that we did as you can see not only where.
Speaker Change: In both cases ships that were not available for sale and they were not into the sales reports at all up until the moment that we conclude the deal.
Speaker Change: The chartering arrangements were also above market at very profitable rates.
Speaker Change: Because it's all embedded lesser but the fact that we upgrade the vessels with all these devices.
Speaker Change: Things that we do for a better operation. So overall, thanks to our long standing relationships.
Speaker Change: The good work.
Speaker Change: Our operations and technical Department are performing we're able to provide good contracts.
Speaker Change: Overall, great projects for their shareholders.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Very welcome Terry Thank you.
Speaker Change: Thank you.
Speaker Change: Now take the next question.
Speaker Change: From the line of Liam Burke from B Riley Securities. Please go ahead.
Liam Burke: Thank you <unk> how are you today.
Speaker Change: We're very well our U I am.
Speaker Change: Just great. Thanks.
Speaker Change: Modest you've talked about the macro on iron ore <unk> got greater ton miles because that's being sourced further away.
Speaker Change: Capacity come on in Guinea, and pretty stable underlying steel production.
Speaker Change: Bauxite is giving you a nice follow through.
Speaker Change: Capesize demand can you give us a little more detail on how much more.
Speaker Change: How much.
Speaker Change: We can see that bauxite supporting demand over time.
Speaker Change: Well as you know the bauxite exports has basically gone up by almost 45% since last year. So it's a major major commodity now for transportation on that long haul basis, and we expect that to continue.
Speaker Change: I cannot really say that it's going to grow another 40% next year and I don't really anticipate that I see a flat demand maybe 5% up.
Speaker Change: For the remainder of the year and for 2026, which already as I mentioned before has increased significantly since last year. So bauxite has become a dominant commodity raw material.
Speaker Change: For the transportation by Capesize vessels, so both iron ore and bauxite.
Speaker Change: Expect it to be quite good up year on year, even though we've had some sort of a weak period year to date.
Speaker Change: But I'm confident that as we turn into.
Speaker Change: Our Q3, and everything we will see bigger and bigger volumes coming up from West Africa, We don't see any slowdown.
Speaker Change: The information from the brokers are telling us.
Speaker Change: Great. Thank you.
Speaker Change: <unk> your daily Opex per vessel dropped nicely.
Speaker Change: That just quarter to quarter variability or is there something else.
Liam: Hi, Liam.
Liam: As I've told you in previous calls.
Liam: We prefer to look opex at Opex on an annual basis, because I mean, youre void is fluctuations quarter over quarter.
Liam: But basically as more of the ships that we have acquired in the last three years go through dry dockings.
Speaker Change: With our own technical management team.
Speaker Change: I mean do you have a direct impact on opex after the Drydocking. So this you.
Speaker Change: You will be you will see reducing or stabilizing at around the levels that <unk> seen in the first quarter.
Speaker Change: We're happy to see drastic improvement so far and we hope that this trend will continue into the next quarters.
Speaker Change: Great. Thank you.
Speaker Change: Thank you very much clear.
Speaker Change: Thank you we will now take the next question.
Speaker Change: From the line of glass and then <unk> from Arctic Securities. Please go ahead.
Speaker Change: Hello.
Speaker Change: Hi, Good morning. Good afternoon. Good morning, Thank you for taking my question.
Speaker Change: I guess I had a question on the markets.
Speaker Change: Touched upon briefly during the presentation as well.
Speaker Change: But I was wondering about so with.
Speaker Change: The capesize rates.
Speaker Change: And then somewhat directional briefing today.
Speaker Change: And in terms of near term market catalysts.
Speaker Change: What do you consider to be the most impactful over the coming months, which of your checking the closest.
Speaker Change: <unk> stainless announcements or something in France.
Speaker Change: Thank you.
Speaker Change: Can you. Please repeat the first part of the question because we kind of lost you for a moment.
Speaker Change: And I was saying that with the capesize rates being somewhat directionless recently.
Speaker Change: And then in terms of near.
Speaker Change: Near term market catalyst.
Speaker Change: Something you're tracking what do you think will be the most impactful over the next couple of months alright.
Speaker Change: Alright, something you're.
Speaker Change: We're tracking closely or is it yes.
Speaker Change: Yes.
Speaker Change: Elaborate a bit on that would be great.
Speaker Change: Yes, that's a great question. Thank you so for us it's a matter of demand, yes. It has been slightly lower.
Speaker Change: The volumes compared to last year, but not enough to make such a big damage that we incurred especially in the first quarter and the beginning of the first quarter in February.
Speaker Change: The biggest issue I have repeated.
Speaker Change: Many many times is a splitting of cargoes, we had a big variation between the Cape sizes.
Speaker Change: Panamax comes out of boxes.
Speaker Change: Basically zero congestion on the smaller sizes, which meant that in order to secure employment.
Speaker Change: The Panamax <unk> took a lot of coal cargos from the Capesize vessels.
Speaker Change: So it's not a matter of demand I mean, the overall volumes are pretty much stable, we have not really seen any material decrease in demand. It was the increase of the effective supply, which is as I mentioned driven by the <unk> panamax incremental effective availability.
Speaker Change: Because of significantly reduced congestion levels all over the world now for the second half of the year.
Speaker Change: Positive news is that all the major miners have reiterated their export.
Speaker Change: Projections, which means that in order to catch the figures that they have said that they will be able to meet.
Speaker Change: Export levels relate to increase substantially.
Speaker Change: Just to get where they have.
Speaker Change: So later it will get.
Speaker Change: Having said that I believe that once we see the increased volumes out of increased push of commodities that are completely aligned with last year or maybe slightly lower.
Speaker Change: We expect we will see rates being significantly higher for the remainder of the year just to give you.
Speaker Change: Just to give you some thoughts on this matter further.
Speaker Change: 2023 that was let's say the weakest year over the last five years, we had an overall average five <unk> of $17 $5000 approximately in order to get to the weakest year in <unk>.
Speaker Change: <unk> thousand 35, assuming that is our low case scenario the remainder of the year needs to be anywhere between 23 and $25000 on the capes, which means that.
Speaker Change: We see a lot of upside on that.
Speaker Change: As an absolute downside risk I will say that this is where we have to face are telling us today.
Speaker Change: I assume material upside as far as we're concerned above that which may be anywhere in the 'twenty two 'twenty three or even in the high <unk> for the remainder of the I cannot give you that but this is the kind of internal predictions we have made.
Speaker Change: Yes.
Speaker Change: Okay. Thank you very much for that protocol or I'll turn it over.
Speaker Change: Thank you I hope that clarifies.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
Speaker Change: Okay.
Speaker Change: [music].