Seanergy Maritime (SHIP) - 2023 Q2 - Quarterly Report

Executive Summary & Financial Highlights Q1 2023 Financial Performance Overview Seanergy Maritime reported a significant decline in financial performance for Q1 2023 compared to Q1 2022, with net revenues decreasing by 39.4% and a shift from net income to net loss. Adjusted EBITDA also saw a substantial reduction, reflecting a challenging Capesize market Q1 2023 Financial Performance Overview (in million USD, except EPS) | Metric (in million USD, except EPS) | Q1 2023 | Q1 2022 | Change (YoY) | | :--------------------------------- | :------ | :------ | :----------- | | Net Revenues | $18.0 | $29.7 | -39.4% | | Net (loss) / income | $(4.2) | $3.7 | -213.5% | | Adjusted net (loss) / income | $(0.3) | $7.7 | -103.9% | | EBITDA | $8.2 | $12.8 | -35.9% | | Adjusted EBITDA | $3.9 | $16.8 | -76.8% | | (Loss) / earnings per Share Basic | $(0.23) | $0.21 | -209.5% | | Adjusted (loss) / earnings per share Basic | $(0.02) | $0.44 | -104.5% | | Daily Time Charter Equivalent (TCE) | $11,005 | $19,357 | -43.1% | - Cash and cash-equivalents and restricted cash stood at $20.5 million as of March 31, 2023 Shareholders' equity was $219.9 million, and long-term debt (net of deferred charges) was $225.8 million[5] Other Key Developments Seanergy Maritime declared a quarterly dividend of $0.025 per share for Q1 2023, bringing total dividends to $1.30 per share since March 2022. The company also secured new financing, significantly reduced its convertible note, and saw management purchase common shares - Declared a quarterly cash dividend of $0.025 per share for Q1 2023, contributing to a total of $1.30 per share ($23.4 million) in cash dividends since March 2022[8] - Completed new financing and refinancing transactions totaling $53.8 million on improved terms, adding approximately $15.0 million of extra liquidity[8] - Eliminated 92% of the original $38.7 million convertible note, including an $8.0 million repayment in Q1 2023[8] - Seanergy's management purchased $0.85 million worth of common shares in the open market[8] - Repurchased 47% of the outstanding Class E Warrants through a tender offer[8] CEO Statement and Business Outlook Market Conditions and Commercial Performance The Capesize market experienced seasonal weakness in Q1 2023, with average rates of $9,144 per day, but has since recovered to profitable levels averaging $17,420 per day in Q2. Seanergy's fleet significantly outperformed the Baltic Capesize Index (BCI) with a daily TCE of $11,005 - Capesize market rates averaged $9,144 per day in Q1 2023, recovering to $17,420 per day in Q2[9] - Seanergy's daily TCE of $11,005 in Q1 2023 significantly outperformed the BCI average of $9,144[10] - Approximately 25% of remaining fleet days for 2023 have been converted to a fixed average daily rate of approximately $20,500, leveraging the improved Capesize FFA market[10] Balance Sheet and Strategic Direction The company maintains a strong balance sheet with a loan-to-value ratio below 50%, providing flexibility. Strategic actions include the sale of two older vessels for a significant gain and three refinancings in April, which released $15.0 million in additional liquidity and reduced debt costs, aligning with fleet renewal goals - Balance sheet remains strong with a loan to value ratio below 50% at the end of Q1 2023[11] - Delivered two older ships to United Maritime Corporation for a sizeable gain[11] - Completed three refinancings in April, releasing approximately $15.0 million of additional liquidity and decreasing the cost of debt[11] Outlook and Shareholder Returns Seanergy is optimistic about Capesize demand due to increased iron ore supply and low inventories in China, coupled with historically low fleet growth. The company aims to balance capital returns to shareholders with selective investments in high-return vessels, continuing its focus on modernizing the fleet and improving its carbon footprint - Optimistic about Capesize demand driven by increased seaborne iron ore supply and reduced iron ore inventories in China[12] - Expects historically low fleet growth to support a strong earnings environment for Capesize vessels[12] - Aims to balance returning capital to shareholders with selective investments in vessels for high returns, while modernizing the fleet and improving carbon footprint[12][13] Fleet Information and Operational Data Company Fleet Details Seanergy Maritime operates a fleet of 16 Capesize vessels with an average age of 12.3 years and an aggregate cargo carrying capacity of approximately 2.85 million DWT. The fleet primarily operates on index-linked time charters, with options to convert to fixed rates based on FFA Company Fleet Details | Vessel Name | Capacity (DWT) | Year Built | Scrubber Fitted | Employment Type | T/C expiration (Min) | T/C expiration (Max) | Charterer | | :---------- | :------------- | :--------- | :-------------- | :-------------- | :------------------- | :------------------- | :-------- | | Fellowship | 179,701 | 2010 | - | T/C Index Linked | 06/2024 | 11/2024 | Anglo American | | Worldship | 181,415 | 2012 | Yes | T/C Index Linked | 09/2023 | 01/2024 | Cargill | | Championship| 179,238 | 2011 | Yes | T/C Index Linked | 04/2025 | 10/2025 | Cargill | | Flagship | 176,387 | 2013 | - | T/C Index Linked | 05/2026 | 07/2026 | Cargill | | Patriotship | 181,709 | 2010 | Yes | T/C Index Linked | 11/2023 | 06/2024 | Glencore | | Knightship | 178,978 | 2010 | Yes | T/C Index Linked | 10/2024 | 12/2024 | Glencore | | Premiership | 170,024 | 2010 | Yes | T/C Index Linked | 04/2024 | 06/2024 | Glencore | | Squireship | 170,018 | 2010 | Yes | T/C Index Linked | 05/2024 | 07/2024 | Glencore | | Dukeship | 181,453 | 2010 | - | T/C Index Linked | 04/2024 | 09/2024 | NYK | | Hellasship | 181,325 | 2012 | - | T/C Index Linked | 12/2023 | 03/2024 | NYK | | Honorship | 180,242 | 2010 | - | T/C Index Linked | 02/2024 | 07/2024 | NYK | | Geniuship | 170,057 | 2010 | - | T/C Index Linked | 04/2024 | 08/2024 | NYK | | Friendship | 176,952 | 2009 | - | T/C Index Linked | 12/2023 | 03/2024 | NYK | | Paroship | 181,415 | 2012 | Yes | T/C Index Linked | 10/2023 | 12/2023 | Oldendorff | | Partnership | 179,213 | 2012 | Yes | T/C Index Linked | 08/2023 | 11/2023 | Uniper | | Lordship | 178,838 | 2010 | Yes | T/C Index Linked | 07/2023 | 10/2023 | Uniper | | Total / Average | 2,846,965 | 12.3 | - | - | - | - | - | - The company has the option to convert index-linked rates to fixed rates for periods of 1 to 12 months based on prevailing Capesize FFA Rates[16] Fleet Operational Metrics In Q1 2023, Seanergy's fleet utilization improved to 98.8% from 96.9% in Q1 2022, despite a significant decrease in the Time Charter Equivalent (TCE) rate from $19,357 to $11,005. Daily Vessel Operating Expenses increased by 7.4% year-over-year Fleet Operational Metrics (U.S. Dollars in thousands) | Metric (U.S. Dollars in thousands) | Q1 2023 | Q1 2022 | Change (YoY) | | :--------------------------------- | :------ | :------ | :----------- | | Ownership days | 1,539 | 1,530 | +0.6% | | Operating days | 1,520 | 1,482 | +2.6% | | Fleet utilization | 98.8% | 96.9% | +1.9 pp | | TCE rate | $11,005 | $19,357 | -43.1% | | Daily Vessel Operating Expenses | $6,922 | $6,444 | +7.4% | TCE Rate Reconciliation (In thousands of U.S. Dollars) | Metric | Q1 2023 | Q1 2022 | | :------------------------ | :------ | :------ | | Vessel revenue, net | 17,384 | 29,666 | | Less: Voyage expenses | 657 | 979 | | Time charter equivalent revenues | 16,727 | 28,687 | | Operating days | 1,520 | 1,482 | | TCE rate | $11,005 | $19,357 | Daily Vessel Operating Expenses Reconciliation (In thousands of U.S. Dollars) | Metric | Q1 2023 | Q1 2022 | | :----------------------------------- | :------ | :------ |\ | Vessel operating expenses | 10,913 | 9,912 | | Less: Pre-delivery expenses | 260 | 53 | | Vessel operating expenses before pre-delivery expenses | 10,653 | 9,859 | | Ownership days | 1,539 | 1,530 | | Daily Vessel Operating Expenses | $6,922 | $6,444 | Financial Reconciliations and Non-GAAP Measures EBITDA and Adjusted EBITDA Reconciliation Seanergy provides reconciliations for non-GAAP measures EBITDA and Adjusted EBITDA. In Q1 2023, EBITDA decreased by 35.9% and Adjusted EBITDA by 76.8% year-over-year, primarily due to a net loss and a significant gain on vessel sales in the current quarter offsetting other expenses EBITDA and Adjusted EBITDA Reconciliation (In thousands of U.S. Dollars) | Metric | Q1 2023 | Q1 2022 | | :------------------------------ | :------ | :------ | | Net (loss) / income | (4,185) | 3,671 | | Net interest and finance cost | 5,261 | 2,850 | | Depreciation and amortization | 7,077 | 6,265 | | EBITDA | 8,153 | 12,786 | | Stock based compensation | 3,680 | 2,679 | | Loss on extinguishment of debt | 110 | 1,279 | | Loss on forward freight agreements, net | 50 | 36 | | Gain on sale of vessel | (8,094) | - | | Adjusted EBITDA | 3,899 | 16,780 | - EBITDA is defined as net income/(loss) plus net interest and finance costs, depreciation and amortization, and income taxes Adjusted EBITDA further excludes stock-based compensation, loss on forward freight agreements, loss on extinguishment of debt, and non-recurring gains on vessel sales[21] Adjusted Net Income and EPS Reconciliation Adjusted Net Income and Adjusted EPS are presented to provide a clearer view of core operating performance by excluding non-cash items. In Q1 2023, Adjusted Net Loss was $0.345 million, a significant decrease from Adjusted Net Income of $7.665 million in Q1 2022 Adjusted Net income / (loss) Reconciliation (In thousands of U.S. Dollars) | Metric | Q1 2023 | Q1 2022 | | :----------------------------------- | :------ | :------ | | Net (loss) / income | (4,185) | 3,671 | | Stock based compensation | 3,680 | 2,679 | | Loss on extinguishment of debt | 110 | 1,279 | | Loss on forward freight agreements, net | 50 | 36 | | Adjusted net (loss) / income | (345) | 7,665 | | Adjusted (loss) / earnings per common share, basic | (0.02) | 0.44 | | Adjusted (loss) / earnings per common share, diluted | (0.02) | 0.43 | | Weighted average number of common shares outstanding, basic | 17,929,142 | 17,231,175 | | Weighted average number of common shares outstanding, diluted | 17,929,142 | 17,721,863 | - Adjusted Net Income/(Loss) and Adjusted Earnings/(Loss) Per Share exclude non-cash items like gain/(loss) on extinguishment of debt to enhance comparability of performance[23] Cash Interest and Finance Costs Reconciliation The reconciliation of interest and finance costs to cash interest and finance costs shows that cash interest and finance costs increased to $4.238 million in Q1 2023 from $2.192 million in Q1 2022, primarily due to higher net interest and finance costs Interest and Finance Costs to Cash Interest and Finance Costs Reconciliation (In thousands of U.S. Dollars) | Metric | Q1 2023 | Q1 2022 | | :----------------------------------- | :------ | :------ | | Interest and finance costs, net | (5,261) | (2,850) | | Add: Amortization of deferred finance charges and other discounts | 959 | 576 | | Add: Amortization of other deferred charges (shares issued to third party) | 64 | 82 | | Cash interest and finance costs | (4,238) | (2,192) | Q2 2023 TCE Guidance Seanergy projects an estimated Time Charter Equivalent (TCE) of approximately $18,870 for the second quarter of 2023. This guidance is based on 75% of the fleet's expected operating days being fixed at an estimated TCE of $18,626, with the remaining index-linked days assumed to be at the average Forward Freight Agreement (FFA) rate of $18,825 per day - Approximately 75% of the fleet's expected operating days in Q2 2023 are fixed at an estimated TCE of $18,626[25] - Assuming the remaining index-linked operating days achieve an average FFA rate of $18,825 per day, the estimated TCE for Q2 2023 is approximately $18,870[25] Q2 2023 TCE Guidance Breakdown | Category | Operating Days | TCE | | :---------------------------- | :------------- | :------ | | TCE - fixed rate (index-linked conversion) | 455 | 21,079 | | TCE - fixed rate | 0 | N/A | | TCE – index-linked | 1,001 | 17,866 | | Total / Average | 1,456 | 18,870 | First Quarter and Recent Developments Dividend Distributions Seanergy paid a quarterly dividend of $0.025 per share for Q4 2022 on April 25, 2023, and declared another $0.025 per share dividend for Q1 2023, payable on or about July 6, 2023 - Paid Q4 2022 quarterly dividend of $0.025 per share on April 25, 2023[27] - Declared Q1 2023 cash dividend of $0.025 per share, payable around July 6, 2023[27] Capital Structure and Shareholder Actions Buyback of Convertible Note The company repaid $8.0 million of its convertible note on January 3, 2023, reducing the outstanding amount to approximately $3.2 million and preventing the potential issuance of 667,000 shares - Repaid $8.0 million of the convertible note on January 3, 2023, reducing the outstanding balance to approximately $3.2 million[28] - The buyback pre-empted the potential issuance of 667,000 shares based on a $12 per share conversion price[28] Stock Purchases by Management Seanergy's CEO, Stamatis Tsantanis, purchased 145,000 shares for approximately $750,000, and CFO, Stavros Gyftakis, purchased 18,510 shares for approximately $100,000 in the open market - CEO purchased 145,000 shares at an average price of $5.17 per share, totaling approximately $750,000[29] - CFO purchased 18,510 shares at an average price of $5.40 per share, totaling approximately $100,000[29] Class E Warrants Tender Offer The company completed a tender offer on January 10, 2023, to purchase Class E Warrants at $0.20 per warrant, repurchasing 4,038,114 warrants, representing approximately 47% of the outstanding Class E Warrants - Completed tender offer to purchase 4,038,114 Class E Warrants at $0.20 per warrant, representing approximately 47% of outstanding warrants[30] - Remaining outstanding Class E Warrants are exercisable for up to 449,459 common shares at an exercise price of $4.965 per share[30] Vessel Transactions and Commercial Updates Seanergy secured new time-charter agreements and extensions for several vessels, including a new 24-30 month index-linked charter for M/V Championship with a scrubber profit share, and extensions for M/V Knightship and M/V Geniuship. The company also profitably sold M/V Goodship and M/V Tradership for an aggregate price of $36.25 million, realizing an $8.1 million combined profit - M/V Championship commenced a new 24-30 month index-linked time charter with a scrubber profit share scheme[31] - M/V Knightship's charterer exercised an option to extend the time charter for 11-13 months[32] - M/V Geniuship's time charter agreement was extended for 11-15 months[33] - Sold M/V Goodship and M/V Tradership for an aggregate price of $36.25 million, generating a combined profit of approximately $8.1 million[34] Financing Updates Seanergy completed several financing transactions, including a $19.0 million sale and leaseback for M/V Lordship, a $15.8 million sustainability-linked loan for M/V Championship, and another $19.0 million sale and leaseback for M/V Knightship. These transactions collectively released additional liquidity and reduced interest rates, while also prepaying $12.9 million in Aegean Baltic Bank Loan facilities related to vessel sales - Entered a $19.0 million sale and leaseback for M/V Lordship, releasing approximately $6.6 million in additional liquidity and reducing the interest rate by 50 bps[35] - Amended and restated a loan facility to include a new $15.8 million tranche for M/V Championship, introducing a sustainability adjustment mechanism to the interest rate[36] - Completed a $19.0 million sale and leaseback for M/V Knightship, releasing approximately $8.5 million in additional liquidity and reducing the interest rate by 120 bps[37] - Prepaid $12.9 million of the Aegean Baltic Bank Loan Facility in connection with the sales of M/V Goodship and M/V Tradership[38] Conference Call Information Seanergy Maritime hosted a conference call on May 25, 2023, at 10:00 a.m. Eastern Time to discuss its Q1 2023 financial results. An archived webcast of the call is available on the company's website - Conference call to discuss financial results was held on Thursday, May 25, 2023, at 10:00 a.m. Eastern Time[39] - A live and archived webcast of the conference call is available through the Company's website under the Investor Relations page[40] Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Balance Sheets As of March 31, 2023, Seanergy's total assets decreased to $466.413 million from $513.600 million at year-end 2022, primarily due to a reduction in vessels, net, and cash. Total liabilities also decreased, while stockholders' equity remained relatively stable Unaudited Condensed Consolidated Balance Sheets (In thousands of U.S. Dollars) | ASSETS | March 31, 2023 | December 31, 2022* | | :----------------------------------------- | :------------- | :----------------- | | Cash and cash equivalents, restricted cash and term deposits | 20,511 | 32,477 | | Vessels, net and Vessels held for sale | 428,205 | 462,385 | | Other assets | 17,697 | 18,738 | | TOTAL ASSETS | 466,413 | 513,600 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Long-term debt and other financial liabilities | 222,922 | 244,866 | | Convertible notes | 2,910 | 10,833 | | Other liabilities | 20,726 | 36,202 | | Stockholders' equity | 219,855 | 221,699 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 466,413 | 513,600 | Unaudited Condensed Consolidated Statements of Operations Seanergy reported a net loss of $4.185 million in Q1 2023, a significant decline from a net income of $3.671 million in Q1 2022. This was driven by lower net revenues, higher interest and finance costs, and increased general and administrative expenses, partially offset by a gain on vessel sales Unaudited Condensed Consolidated Statements of Operations (In thousands of U.S. Dollars) | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Vessel revenue, net | 17,384 | 29,666 | | Fees from related parties | 642 | - | | Revenue, net | 18,026 | 29,666 | | Expenses: | | | | Voyage expenses | (657) | (979) | | Vessel operating expenses | (10,913) | (9,912) | | Management fees | (229) | (376) | | General and administrative expenses | (5,905) | (4,315) | | Depreciation and amortization | (7,077) | (6,265) | | Loss on forward freight agreements, net | (50) | (36) | | Gain on sale of vessel | 8,094 | - | | Operating income | 1,289 | 7,783 | | Other income / (expenses): | | | | Interest and finance costs, net | (5,261) | (2,850) | | Loss on extinguishment of debt | (110) | (1,279) | | Other, net | (103) | 17 | | Total other expenses, net: | (5,474) | (4,112) | | Net (loss) / income | (4,185) | 3,671 | | Net (loss) / income per common share, basic | (0.23) | 0.21 | | Net (loss) / income per common share, diluted | (0.23) | 0.21 | | Weighted average number of common shares outstanding, basic | 17,929,142 | 17,231,175 | | Weighted average number of common shares outstanding, diluted | 17,929,142 | 17,721,863 | Unaudited Condensed Consolidated Cash Flow Data In Q1 2023, net cash used in operating activities was $0.264 million, a decrease from $7.549 million provided in Q1 2022. Net cash provided by investing activities significantly increased to $23.863 million due to proceeds from asset sales, while net cash used in financing activities increased to $35.565 million, primarily due to debt repayments and dividends paid Unaudited Condensed Consolidated Cash Flow Data (In thousands of U.S. Dollars) | Metric | March 31, 2023 | March 31, 2022 | | :----------------------------------------- | :------------- | :------------- | | Net cash (used in) / provided by operating activities | (264) | 7,549 | | Vessels acquisitions and improvements | - | (2,042) | | Proceeds from sale of assets | 23,910 | - | | Term deposits | - | 1,500 | | Other fixed assets, net | (47) | (18) | | Net cash provided by / (used in) investing activities | 23,863 | (560) | | Proceeds from long-term debt and other financial liabilities | - | 21,300 | | Repayments of long-term debt and other financial liabilities | (22,994) | (24,652) | | Repayments of convertible notes | (8,000) | (10,000) | | Payments for fractional shares of reverse stock split | (23) | - | | Payments of financing and stock issuance costs | - | (378) | | Dividends paid | (4,548) | - | | Net cash used in financing activities | (35,565) | (13,730) | | SUPPLEMENTAL CASH FLOW INFORMATION | | | | Cash paid during the period for interest | 4,422 | 2,324 | | Noncash investing activities | | | | Vessels acquisitions and improvements | - | 836 | | Noncash financing activities | | | | Dividends declared but not paid | 500 | 8,916 | Company Information and Disclosures About Seanergy Maritime Holdings Corp. Seanergy Maritime Holdings Corp. is a U.S. publicly listed pure-play Capesize ship-owner, providing marine dry bulk transportation services with a modern fleet of 16 Capesize vessels. The fleet has an average age of approximately 12.3 years and an aggregate cargo carrying capacity of about 2.85 million DWT - Seanergy Maritime Holdings Corp. is the only pure-play Capesize ship-owner publicly listed in the U.S.[46] - Operates a modern fleet of 16 Capesize vessels with an average age of approximately 12.3 years and an aggregate cargo carrying capacity of approximately 2,846,965 dwt[46] - The company's common shares trade on the Nasdaq Capital Market under the symbol 'SHIP'[47] Forward-Looking Statements This section contains standard forward-looking statements, cautioning that future events and actual results may differ materially from expectations due to various known and unknown risks, including market conditions, competitive factors, shipping industry trends, and global events. The company disclaims any obligation to publicly update these statements - Statements regarding future events are forward-looking and involve known and unknown risks, uncertainties, and contingencies[49] - Factors that could cause actual results to differ include operating/financial results, liquidity, competitive factors, shipping industry trends, acquisitions/dispositions, and broader market impacts from global events[49] - The company expressly disclaims any obligation to publicly release updates or revisions to forward-looking statements, except as required by law[49] Contact Information Contact information for Seanergy Investor Relations and Capital Link, Inc. is provided for further inquiries - Contact details for Seanergy Investor Relations (Tel: +30 213 0181 522, E-mail: ir@seanergy.gr) and Capital Link, Inc. (Paul Lampoutis, Tel: (212) 661-7566, E-mail: seanergy@capitallink.com) are available[50]