Seanergy Maritime Holdings Corp. (the “Company”) (NASDAQ: SHIP),
announced today its financial results for the first quarter ended
March 31, 2019.
For the quarter ended March 31, 2019, the
Company generated net revenues of $16 million, a 25% decrease
compared to the first quarter of 2018. EBITDA for the quarter was
$0.4 million, compared to EBITDA of $4.6 million in the same period
of 2018. Net loss for the first quarter was $8.6 million compared
to net loss of $3.4 million in the first quarter of 2018. The daily
Time Charter Equivalent (TCE)1 of the fleet for the first quarter
of 2019 was $7,633, compared to $11,700 in the first quarter of
2018. The average daily OPEX of the fleet for the quarter was
$4,830, reduced by 6% from $5,114 in the respective quarter of
2018.
Stamatis Tsantanis, the Company’s
Chairman & Chief Executive Officer, stated:
“During the first quarter of 2019, the Company’s
financial performance was negatively impacted by the severe
disruptions in the iron ore trade due to the tragedy at Vale’s
Brumadinho mine. Other factors impacting the market were the
adverse weather conditions in Australia, first quarter seasonality
and trade tensions between the US and China. Year on year our daily
TCE in the first quarter declined by approximately 35%, largely in
line with a 33% drop in the Baltic Capesize Index (“BCI”) in the
same period. However, the negative impact of all these events
appears to be behind us. During the second quarter we have seen a
strong recovery in the Capesize market which has so far been
reflected in our operating performance. From a low rate of $3,500
per day the Capesize market is currently trading around $14,000 per
day. We therefore expect the multiyear low rates of Q1 to end up
being the lowest point in our financial performance for this
year.
Regarding the implementation of our
environmental investments, we are on schedule to install scrubbers
on half of our vessels within 2019 before the implementation of the
IMO 2020 Sulphur Cap. In addition, two ships that will not be
fitted with scrubbers, are scheduled to pass through special and
intermediate surveys. Our first scheduled dry-docking, that of the
2004 built M/V Gloriuship was completed successfully in April at
the same ship yard were the scrubber installations will take place.
The first scrubber installation on our M/V Lordship is currently in
process. We expect that all scrubber installations and scheduled
maintenance will be completed by the end of October. Our commercial
agreements relating to scrubber installation are covering a
majority of the cost of such off-hires.
On market developments, it is worth noting that
in the period from January to May 2019 Capesize demolition in
deadweight terms rose by approximately 140% compared to the same
period in 2018, driven by the sales of 6 older Very Large Ore
Carriers. As a result, net fleet growth of 1 million deadweight
tons up to May 2019 is more than four times lower than in the same
period of 2018. For full year 2019, net Capesize fleet growth is
now expected to be lower than 1.7% highlighting a slowing trend in
fleet growth expectations.
Moreover, due to the disruption of Vale exports
and associated iron ore price increase, iron ore stockpiles in
China have fallen to levels last seen in February 2017. Given the
pace of inventory drawdowns and generally robust downstream steel
demand, most market sources consider iron ore inventories to be at
critically low levels that will soon lead to aggressive restocking.
Lastly, the implementation of IMO 2020 rules will lead to fleet
supply disruptions as more than 15% of the global Capesize fleet is
expected to be dry-docked for scrubber installations within 2019.
Vessels that are not going to install scrubbers are also expected
to incur off hire days for fuel tank cleaning to accommodate the
use of new low Sulphur fuels, further restricting effective vessel
supply.
Against this backdrop, we have been very
proactive about improving our liquidity position. In May 2019 we
completed a public offering and a private placement for a total
amount of $20.5 million. We raised $14.3 million of gross proceeds
through a public offering of units. In addition to the public
offering, we completed a private placement of $6.2 million of units
at the public offering price to Jelco Delta Holding Corp.
(“Jelco”), a company affiliated with our major shareholders, in
exchange for the forgiveness of certain payment obligations of
ours, including all interest payments due in 2019. Earlier in the
year, in March 2019, Jelco also provided a new loan of $5 million
to the Company. As previously disclosed, we have agreed to a $4.5
million top-up on one of our existing facilities with a major
European bank and $3.3 million of principal deferrals, approved by
certain of our lenders. Therefore, since the beginning of the year,
the improvement in the Company’s liquidity position has been
approximately $32 million.
We believe that Seanergy is well protected from
any temporary market slowdown and in a superior position to ride a
rising freight market in view of the favorable market
fundamentals.”
Company Fleet:
Vessel Name |
VesselClass |
Capacity(DWT) |
Year Built |
Yard |
Scrubber Fitted (1) |
Employment |
Initial CharterPeriod |
Partnership |
Capesize |
179,213 |
2012 |
Hyundai |
Yes |
T/C IndexLinked (2) |
3 years afterscrubber installation |
Championship (3) |
Capesize |
179,238 |
2011 |
Sungdong |
Yes |
T/C IndexLinked (4) |
5 years |
Lordship |
Capesize |
178,838 |
2010 |
Hyundai |
Yes |
T/C IndexLinked (5) |
3 years afterscrubber installation |
Premiership |
Capesize |
170,024 |
2010 |
Sungdong |
Yes |
T/C IndexLinked (6) |
3 years afterscrubber installation |
Squireship |
Capesize |
170,018 |
2010 |
Sungdong |
Yes |
T/C IndexLinked (7) |
3 years afterscrubber installation |
Fellowship |
Capesize |
179,701 |
2010 |
Daewoo |
No |
Spot |
|
Knightship (8) |
Capesize |
178,978 |
2010 |
Hyundai |
No |
Spot |
|
Geniuship |
Capesize |
170,058 |
2010 |
Sungdong |
No |
Spot |
|
Gloriuship |
Capesize |
171,314 |
2004 |
Hyundai |
No |
Spot |
|
Leadership |
Capesize |
171,199 |
2001 |
Koyo – Imabari |
No |
Spot |
|
(1) Scrubbers on
selected ships to be installed between June and October 2019.
(2) Chartered by a
major European utility and energy company from August 2019 for a
period of 33 to 37 months with an optional period of 11-13 months.
The daily charter hire is based on the BCI. In addition, the
Company has the option to convert to a fixed rate for a period of
between three and 12 months, based on the prevailing Capesize
Forward Freight Agreement Rate (“FFA”) for the selected period.
(3) Sold to and
leased back on a bareboat basis from a major commodity trading
company on November 7, 2018 for a five-year period. We have a
purchase obligation at the end of the five-year period and we
further have the option to repurchase the vessel at any time.
(4) Chartered by a
major commodity trading company from November 7, 2018 for a period
of 60 months, with an additional period of 18 months at charterer’s
option. The daily charter hire is based on the BCI. In addition,
the Company has the option to convert to a fixed rate for a period
of between three and 12 months, based on the prevailing Capesize
FFA for the selected period.
(5) Chartered by a
major European utility and energy company from June 2019 for a
period of 33 to 37 months with an optional period of 11-13 months.
The daily charter hire is based on the BCI. In addition, the
Company has the option to convert to a fixed rate for a period of
between three and 12 months, based on the prevailing Capesize FFA
for the selected period.
(6) Chartered by a
major commodity trading company from September 2019 for a period of
33 to 37 months with two optional periods of 11-13 months each. The
daily charter hire is based on the BCI.
(7) Chartered by a
major commodity trading company from August 2019 for a period of 33
to 37 months with two optional periods of 11-13 months each. The
daily charter hire is based on the BCI.
(8) Sold to and
leased back on a bareboat basis from a major Chinese leasing
institution on June 29, 2018 for an eight-year period. We have a
purchase obligation at the end of the eight-year period and we
further have the option to repurchase the vessel at any time
following the second anniversary of the delivery under the bareboat
charter.
Fleet Data:
|
Q1 2019 |
|
Q1 2018 |
|
Ownership days (1) |
|
900 |
|
|
990 |
|
Operating days (2) |
|
885 |
|
|
988 |
|
Fleet utilization (3) |
|
98.3% |
|
|
99.8% |
|
TCE rate (4) |
$7,633 |
|
$11,700 |
|
Daily Vessel Operating Expenses (5) |
$4,830 |
|
$5,114 |
|
(1) Ownership days
are the total number of calendar days in a period during which the
vessels in a fleet have been owned or chartered in. Ownership days
are an indicator of the size of the Company’s fleet over a period
and affect both the amount of revenues and the amount of expenses
that the Company recorded during a period.
(2) Operating days
are the number of available days in a period less the aggregate
number of days that the vessels are off-hire due to unforeseen
circumstances. Operating days includes the days that our vessels
are in ballast voyages without having finalized agreements for
their next employment.
(3) Fleet utilization
is the percentage of time that the vessels are generating revenue
and is determined by dividing operating days by ownership days for
the relevant period.
(4) Time Charter
Equivalent (TCE) rate is defined as the Company’s net revenue less
voyage expenses during a period divided by the number of the
Company’s operating days during the period. Voyage expenses include
port charges, bunker (fuel oil and diesel oil) expenses, canal
charges and other commissions. The Company includes the TCE rate, a
non-GAAP measure, as it believes it provides additional meaningful
information in conjunction with net revenues from vessels, the most
directly comparable U.S. GAAP measure, and because it assists the
Company’s management in making decisions regarding the deployment
and use of the Company’s vessels and in evaluating their financial
performance. The Company’s calculation of TCE rate may not be
comparable to that reported by other companies. The following table
reconciles the Company’s net revenues from vessels to the TCE
rate. (In thousands
of U.S. Dollars, except operating days and TCE rate)
|
Q1 2019 |
Q1 2018 |
Net revenues from vessels |
16,013 |
21,322 |
Less: Voyage expenses |
9,258 |
9,762 |
Net operating revenues |
6,755 |
11,560 |
Operating days |
885 |
988 |
TCE rate |
7,633 |
11,700 |
(5) Vessel
operating expenses include crew costs, provisions, deck and engine
stores, lubricants, insurance, maintenance and repairs. Daily
Vessel Operating Expenses are calculated by dividing vessel
operating expenses by ownership days for the relevant time periods.
The Company’s calculation of daily vessel operating expenses may
not be comparable to that reported by other companies. The
following table reconciles the Company’s vessel operating expenses
to daily vessel operating
expenses. (In
thousands of U.S. Dollars, except ownership days and Daily Vessel
Operating Expenses)
|
Q1 2019 |
Q1 2018 |
Vessel operating expenses |
4,422 |
5,063 |
Less: Pre-delivery expenses |
75 |
- |
Vessel operating expensesbefore pre-delivery expenses |
4,347 |
5,063 |
Ownership days |
900 |
990 |
Daily Vessel Operating
Expenses |
4,830 |
5,114 |
Net Loss to EBITDA Reconciliation:
(In thousands of U.S. Dollars)
|
Q1 2019 |
|
Q1 2018 |
|
Net loss |
(8,643 |
) |
(3,442 |
) |
Add: Net interest and finance cost |
6,236 |
|
5,141 |
|
Add: Depreciation and amortization |
2,834 |
|
2,939 |
|
EBITDA |
427 |
|
4,638 |
|
Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA") represents the sum of net (loss),
interest and finance costs, interest income, depreciation and
amortization and, if any, income taxes during a period. EBITDA is
not a recognized measurement under U.S. GAAP.
EBITDA, is presented as we believe that this
measure is useful to investors as a widely used means of evaluating
operating profitability. EBITDA as presented here may not be
comparable to similarly titled measures presented by other
companies. This non-GAAP measure should not be considered in
isolation from, as a substitute for, or superior to, financial
measures prepared in accordance with U.S. GAAP.
First Quarter and Recent Developments:
Public offering and Private placement of
Shares
On May 13, 2019, the Company sold 4,200,000
units at a price of $3.40 per unit in a public offering. Each unit
consisted of one common share (or one pre-funded warrant in lieu
thereof), one Class B warrant to purchase one common share and one
Class C warrant to purchase one common share. In connection with
the offering, the underwriters have exercised in full their
overallotment option with regard to 630,000 Class B Warrants and
630,000 Class C Warrants. The gross proceeds of the offering to the
Company, before underwriting discounts and commissions and
estimated offering expenses, were approximately $14.3 million. The
net proceeds from the sale of common shares and warrants, after
deducting underwriters’ fees and expenses, were approximately $13.2
million. The Class B warrants are trading on the NASDAQ Capital
Market under the symbol “SHIPZ”.
Concurrently with the offering, the Company sold
1,823,529 units in a private placement to Jelco in exchange for the
forgiveness of certain payment obligations of ours, including all
interest payments due in 2019.
New Jelco Loan Facility
On March 26, 2019, we entered into a $7.0
million loan facility with Jelco, the proceeds of which were
utilized to (i) refinance the loan facility originally entered into
with Jelco on April 10, 2018, with an outstanding balance of $2.0
million and (ii) for general corporate purposes. Following the
private placement to Jelco, the applicable interest rate for the
loan has been set at 0% per annum for the period commencing on
April 1, 2019 and ending on December 31, 2019 and, to 6% per annum
thereafter. The loan has a maturity date of September 30, 2020 and
is repayable through one installment of $1 million due on January
5, 2020 and a balloon instalment of $6 million payable at
maturity.
Seanergy Maritime Holdings
Corp.Unaudited Condensed Consolidated Balance Sheets(In
thousands of U.S. Dollars)
|
|
March 31,2019 |
|
|
December 31,2018* |
|
ASSETS |
|
|
|
|
|
|
Cash and restricted
cash |
|
7,472 |
|
|
7,444 |
|
Vessels |
|
240,530 |
|
|
243,214 |
|
Other assets |
|
17,497 |
|
|
16,904 |
|
TOTAL
ASSETS |
|
265,499 |
|
|
267,562 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Bank debt and other
financial liabilities |
|
192,459 |
|
|
195,221 |
|
Convertible notes |
|
12,109 |
|
|
11,124 |
|
Due to related
parties |
|
24,350 |
|
|
19,349 |
|
Other liabilities |
|
23,112 |
|
|
20,565 |
|
Stockholders’ equity |
|
13,469 |
|
|
21,303 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
265,499 |
|
|
267,562 |
|
* Derived from the audited consolidated financial statements as
of the period as of that date
Seanergy Maritime Holdings
Corp.Unaudited Condensed Consolidated Statements of
Operations (In thousands of U.S. Dollars, except for share and
per share data, unless otherwise stated)
|
|
Three months ended March 31, |
|
|
|
2019 |
|
2018 |
|
Revenues: |
|
|
|
|
|
Vessel revenue, net |
|
16,013 |
|
21,322 |
|
Expenses: |
|
|
|
|
|
Voyage expenses |
|
(9,258 |
) |
(9,762 |
) |
Vessel operating expenses |
|
(4,422 |
) |
(5,063 |
) |
Management fees |
|
(247 |
) |
(264 |
) |
General and administrative expenses |
|
(1,686 |
) |
(1,552 |
) |
Depreciation and amortization |
|
(2,834 |
) |
(2,939 |
) |
Operating (loss) income |
|
(2,434 |
) |
1,742 |
|
Other expenses: |
|
|
|
|
|
Interest and finance costs |
|
(6,256 |
) |
(5,141 |
) |
Other, net |
|
47 |
|
(43 |
) |
Total other expenses, net: |
|
(6,209 |
) |
(5,184 |
) |
Net loss |
|
(8,643 |
) |
(3,442 |
) |
|
|
|
|
|
|
Net loss per common share, basic |
|
(3.23 |
) |
(1.40 |
) |
Weighted average number of common shares outstanding, basic |
|
2,674,885 |
|
2,458,473 |
|
|
|
|
|
|
|
About Seanergy Maritime Holdings
Corp.
Seanergy Maritime Holdings Corp. is the only
pure-play Capesize ship-owner publicly listed in the US. Seanergy
provides marine dry bulk transportation services through a modern
fleet of 10 Capesize vessels, with a cargo-carrying capacity of
approximately 1,748,581 dwt and an average fleet age of about 10.2
years.
The Company is incorporated in the Marshall
Islands with executive offices in Athens, Greece and an office in
Hong Kong. The Company's common shares trade on the Nasdaq Capital
Market under the symbol "SHIP", its Class A warrants under "SHIPW"
and its Class B warrants under “SHIPZ”.
Please visit our company website at:
www.seanergymaritime.com
Forward-Looking Statements
This press release contains forward-looking
statements (as defined in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended) concerning future events. Words such as "may",
"should", "expects", "intends", "plans", "believes", "anticipates",
"hopes", "estimates" and variations of such words and similar
expressions are intended to identify forward-looking statements.
These statements involve known and unknown risks and are based upon
a number of assumptions and estimates, which are inherently subject
to significant uncertainties and contingencies, many of which are
beyond the control of the Company. Actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially include, but are not limited to, the Company's operating
or financial results; the Company's liquidity, including its
ability to service its indebtedness; competitive factors in the
market in which the Company operates; shipping industry trends,
including charter rates, vessel values and factors affecting vessel
supply and demand; future, pending or recent acquisitions and
dispositions, business strategy, areas of possible expansion or
contraction, and expected capital spending or operating expenses;
risks associated with operations outside the United States; and
other factors listed from time to time in the Company's filings
with the SEC, including its most recent annual report on Form 20-F.
The Company's filings can be obtained free of charge on the SEC's
website at www.sec.gov. Except to the extent required by law, the
Company expressly disclaims any obligations or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's
expectations with respect thereto or any change in events,
conditions or circumstances on which any statement is based.
For further information please
contact:Capital Link, Inc.Judit Csepregi230 Park Avenue
Suite 1536New York, NY 10169Tel: (212) 661-7566E-mail:
seanergy@capitallink.com
1 EBITDA and Time Charter Equivalent (“TCE”)
rate are non-GAAP measures. Please see the reconciliation below of
EBITDA to net loss and TCE rate to net revenues from vessels, in
each case the most directly comparable U.S. GAAP measure.
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