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Seanergy Maritime Holdings Corp. (NASDAQ:SHIP)

Q3 2013 Earnings Conference Call

February 20, 2014 08:00 AM ET

Executives

Stamatis Tsantanis - CEO

Analysts

Operator

Thank you for standing by ladies and gentlemen, and welcome to the Seanergy Maritime Conference Call on the Third Quarter and nine months 2013 financial results. We have with us Mr. Stamatis Tsantanis, Chief Executive Officer of the company. At this time all participants are in a listen-only mode. I must also advise you that the conference is being recorded today, on February 20, 2014.

Please be reminded that the company publically released financial results today before the markets opened at New York where it is available to download on the Seanergy website which is www.seanergymaritime.com. If you do not have a copy of the press release, you may contact Capital Link at 212-661-7566 and they will be happy to email or fax a copy to you.

Before turning the call over to Mr. Tsantanis, we would like to remind you that this conference call contains forward-looking statements as defined in section 27A of the Securities Act of 1933, as amended on Section 21E of the Securities Exchange Act of 1934, as amended. Concerning future events and the Company's growth strategy and measures to implement such strategy, words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations; 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 competitive factors in the markets in which the Company operates; risks associated with operations outside the United States, change in rules and regulations applicable to the shipping industry, another risk factors included from time to time in the company’s annual report on form 20-F and other filings with the Securities and Exchange Commission, the SEC.

The company’s fillings can be obtained free of charge on the SEC’s website at www.sec.gov, 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.

Now, I will pass the floor to Mrs. Tsantanis, please go ahead sir.

Stamatis Tsantanis

Thank you, operator. Good morning everyone and thank you for joining our call. Today I will first discuss our recent corporate development and then I will go through our third quarter and nine months 2013 results.

During the third quarter 2012, we had focused on the restructuring of our standing indebtness (Ph) in order to resolve an unsustainable debt burden. Our primary aim has been to overhaul our balance sheet which would enable the company to re-grow on a solid capital structure.

Yesterday, we announced that we have entered into the single agreement with our final lender for the sale of our four remaining vessels. In exchange, Seanergy has achieved the full satisfaction of approximately 145 million of outstanding debt and accrued interest along with the extinguishment of any liabilities under the corporate guarantee. The transaction is expected to close by the end of the first quarter of 2014.

As we have mentioned in the previous announcements, in 2013 we reduced our indebtedness from $209 million at the beginning of the year to a $135 million as of September 30, 2013 through the sale of eight ships and vessel owning subsidiaries. Following the closing of our remaining transaction, our debt will be reduced to zero. This is a development of paramount importance for a company as its result in leveled balance sheet and the financial flexibility to pursue and create investor acquisitions at a favorable point in the shipping market site.

We will now briefly go over our third quarter and nine months financial results.

For the three months ended September 30, 2013; our net revenues were $4.3 million, down 63% compared to the same period last year. The decrease reflects the operation of a smaller fleet at an average of 4.6 vessels in the third quarter of 2013 compared to 17.2 in the same period of 2012. EBITDA was equal to $18.8 million for the third quarter of 2013 as compared to negative EBITDA of $34.4 million in the third quarter of 2012. Our third quarter was positively impacted by non-cash gains of 20.2 million booked on the sale of 30 days.

In the third quarter of 2012, non-cash losses for impairments were equal to $30.8 million. Adjusted for non-cash items EBITDA was negative $1.4 million for the third quarter of 2013 and negative $3.6 million in the same period 2012. Net income for the third quarter of 2013 was $17.1 million or $1.43 income per share compared to a net loss of $42 million or $3.51 loss per share for the same period in 2012. Excluding non-cash items adjusted net loss was equal to $3 million as compared to an adjusted net loss of $11.3 million in the third quarter of 2012.

In the third quarter of 2013, our average daily me charter equivalent rate increased by 42% to $6641 per vessel as compared to $4662 in the same period of 2012.

For the 9 month period ended September 30, 2013; net revenues was $16.7 million, a 64% decrease from $47.1 million last year. The decrease is mainly attributable to 67% decrease in fleet operating days as we operated an average of seven vessels in the first nine months of 2013, compared to 18.5 vessels in the same period last year.

For the nine months ended September 30, 2013; EBITDA was $11.4 million as compared to negative EBITDA of $51.4 million for the nine month period ended September 30, 2012. Our performance in 2013 was positively impacted by $25.7 million of non-cash gains incurred on the sale of subsidiaries that was partially offset by $10.6 million of non-cash impairment losses. In the same period of 2012, our result was negatively impacted by $58.1 million of losses on the sale of vessel and impairment charges. Adjusted for non-cash items, EBITDA was negative $3.8 million for the nine months period of 2013 compared to $6.7 million for the same period in 2012.

Net income in the nine months period ending September 30, 2013 was equal to $3.4 million or $0.29 earnings per share as compared to the net loss of $76.7 million or $6.70 loss per share in the same period of 2012. Adjusted for non-cash items recorded a net loss of $11.7 million in the nine months of 2013 as opposed to a net loss of $18.6 million in the nine months of 2012. In the nine months period of 2013, our daily time charter equivalent rate decrease by 18% to $6463 per vessel, as compared to $7927 in the same period of 2012.

Regarding the general market conditions, industrial production remains at high levels in china and U.S., which is underpinning healthy demand for Seanergy. China’s imports of iron ore in the first 11 months of a year were 747 million tons, up 11% year-on-year which would make 2013 a record year. As industry analysts have projected a decline in the tranche of iron ore in 2013, would drive a strong demand for seaborne iron ore.

Furthermore the two year budget deal stuck in the U.S. Congress along with the recent tapering of the (indiscernible) division have removed (indiscernible) financial stability which is also likely to positively impact the volume of trade in the dry bulk commodities. On the supply side, we are seeing delayed deliveries taking place in 2014 with demand growth expected to track supply growth closely. In particular, tractions projecting net fleet growth of 4% in 2014 as opposed to demand growth of 3%. This includes the negative impact from Indonesia recent ban on mineral exports, so any positive development on that front will be supportive of even higher charter rates.

On a cautionary note, the attractive contract terms offered by major shipyards led to a 158% increase in the new building orders in 2013 out of 955 new vessels for re-contracting. Increased vessels supply is a main factor that usually affects the shipping markets negatively. Overall we believe that there are still opportunities in the second hand market that make good financial sense and can create significant value for the shipping vessels. I expect Seanergy to be positioned favorably to take advantage of such transactions with an unleveled balance sheet and a renowned commercial management with unique access to highly creative views. We anticipate being in a position of provide more guidance in our Q4 and year end call which is expected within March 2014.

On that note, I would like to thank you for listening and I will pass the call back to the operator. Thank you.

Operator

Thank you. That does conclude the conference call today. Thank you for participating. You may disconnect.

Question-and-Answer Session

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