Seanergy Maritime Holdings Corp. (NASDAQ:SHIP)
Q4 2013 Earnings Conference Call
March 27, 2014 09:00 AM ET
Stamatis Tsantanis - CEO and Interim CFO
Thank you for standing by ladies and gentlemen, and welcome to the Seanergy Maritime Conference Call on the Fourth Quarter and Twelve 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. There will be a presentation followed by a question and answer session, (Operator Instructions). I must advise you this conference is being recorded today, March 27, 2014.
Please be reminded that the Company publically released financial results today before the markets opened in New York where it is available to download on the Seanergy web site 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 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 competitive factors in the markets in which the Company operates; risks associated with operations outside of the United States, change in rules and regulations applicable to the shipping industry and other 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 Web site at www.sec.gov, The Company expressly disclaims any obligations or undertakings 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 Mr. Tsantanis. Please go ahead sir.
Thank you, operator, Good morning everyone, and thank you for joining our call. Today I will start my discussion with our recent corporate developments and then I will go through our financial results. I’m very pleased to announce a number of positive news for the Company as we have our first profitable year since 2010 and we successfully completed our restructuring plan. As we announced last week, we have achieved extinguishment of approximately $346 million of debt since 2012. In addition all guarantees of the Company have been fully released.
From the beginning of 2013 the accumulated expected benefit in our total equity is approximately a $110.7 million, $25.7 million of which has been reflected in 2013 and above $85 million will be reflected in the first quarter of 2014. After giving effect to the transactions at December 31, 2013 pro forma total equity is approximately $3 million. For more information, please refer to the capitalization table in our earnings release. Furthermore it should be mentioned that based on recent and upcoming transactions we expect to be in compliance with NASDAQ’s remaining equity requirement by April 28, 2014.
Our financial restructuring plan is now fully complete and our Company has emerged with a clean capital structure. Our unlevered balance sheet provides significant financial flexibility that should allow Seanergy to engage in accretive vessel acquisitions at a preferable point in the dry market cycle. We are now in a position to evaluate a number of strategic opportunities for the company and pursue growth through accretive transactions.
We will now briefly go over our fourth quarter and full year financial results. For the three months ended December 31, 2013 our net revenues were $6.3 million, down 26% compared to the same period last year. The decrease reflects the operation of a smaller fleet as an average of four vessels were owned in the fourth quarter of 2013, compared to 15 in the same period of 2012.
EBITDA was $9.1 million for the fourth quarter of 2013 as compared to negative EBITDA of $110.7 million in the fourth quarter of 2012. Our fourth quarter was positively impacted by non cash gains of $7 million recorded on vessels book value measurements associated with sales of subsidiaries. On the other hand the fourth quarter of 2012 included non cash losses from impairments equal to $109 million. Adjusted for non-cash items EBITDA was $2.1 million for the fourth quarter of 2013 and negative $1.7 million in the same period last year.
Net income for the fourth quarter of 2013 was $7.5 million or $0.62 income per share, compared to a net loss of a $117 million or $9.79 loss per share in the same period last year. Excluding non cash items, adjusted net income was $0.5 million as compared to an adjusted net loss of $30 million in the same period of 2012. With more favorable dry bulk market conditions in the fourth quarter of 2013, our average daily time charter equivalent rate increased by 162% to 14,631 per vessel as compared to 5,592 in the fourth quarter of 2012.
For the year ended December 31, 2013, net revenue was $23.1 million, a 58% decrease from $55.6 million last year. The decrease is mainly attributable to the 67% decrease in fleet operating days as we operated an average of 6.2 vessels in 2013, compared to 17.6 vessels in the same period last year. For the year ended December 31, 2013 EBITDA rose $20.5 million as compared to negative EBITDA of a $162.1 million in 2012.
Our performance in 2013 was positively impacted by $25.7 million of non-cash gains incurred on the sale of subsidiaries that were partially offset by $3.6 million of non cash impairment losses. In the same period of 2012 our results were negatively impacted by $167.1 million of losses from the sale of vessels and impairment charges. Net income for the year ended December 31, 2013 was $10.9 million or $0.91 per share. This compares to a net loss of a $193.8 million or $16.74 loss per share in 2012. In 2013 our TCE rate increased by 7% to 8000 per vessel as compared to 7465 in 2012.
Turning to the general market conditions, in past years higher ship supply growth, as compared to the relevant demand led to declines in charter rates. In 2014 demand and supply growth, are both estimated around 12% which is expected to lead to higher vessel utilization and charter rates. In its latest growth economic outlook in January 2014, the IMF made a slight upward revision to its initial GDP growth estimate which now stands at 3.7%. This was driven by improving economic fundamentals in developed economies and especially Europe which will drive healthy global demand growth for the next few years.
In China, policies aimed at controlling excessive lending, as well as emphasis placed on shifting the focus of the economy to consumption and infrastructure development is expected to lead to steady growth in the following years which will likely reflect a healthy increase in world trade and shipping demand. In particular iron ore prices are largely expected to fall in 2014 which is going to make imported iron ore more attractive for Chinese steel mills.
Improving expectations are clearly reflected in the fleet size, long-term charter market where [indiscernible] charters in the first 10 weeks of 2014 has doubled as compared to the same period of 2013. The expected increase in Panama fleet is about 74%. On a cautionary note, the attractive contract terms offered by major shipyards led to a 158% increase in new building orders in 2013 as 955 new vessels were contracted. Increased rate of supply is the main factor that usually affects the shipping markets negatively.
That said the order book stands at around 21% of the existing fleet in deadwood [ph] terms and we’ve started a seeing significant leveling off contracting activity, so far in 2014 which is down 13% compared to the same period last year. Going forward the advantageous prices offered by shipyards in 2013 are unlikely to be available for very long which may lead to a moderation of new building activity.
Overall we believe there are still opportunities in the second-hand market that make good financial sense and can create significant value for the shipping investors. I expect Seanergy will be positioned favorably to take advantage of such transactions, within our levered balance sheet and a renowned commercial management with unique access to find the accretive deals. I am looking forward to present these opportunities to our investors which I expect will generate significant returns. Thank you very much for attending our call.
That does conclude our conference for today. Thank you for participating. You may now disconnect.
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