Seanergy Maritime Holdings Corp. (NASDAQ:SHIP)
Q1 2014 Earnings Conference Call
July 3, 2014 09:00 AM ET
Stamatis Tsantanis - Chairman and CEO
Thank you for standing by ladies and gentlemen, and welcome to the Seanergy Maritime Conference Call on the First Quarter 2014 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, July 3, 2014.
Please be reminded that the Company publicly released financial results today before the market 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’d 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, and 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 the actual results to differ materially include, but are not limited to competitive factors in the market in which the Company operates; risks associated with operations outside 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 filings can be obtained free of charge on the SEC’s Web site 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’ll 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 discuss our recent corporate developments, and then I will briefly go through our first quarter 2014 financial results.
During the first quarter of 2014, we completed a significant financial restructuring, which led to the elimination of all of our indebtedness and has positioned the company favorably to take advantage of future growth opportunities. Over the past few years, we’ve been able to release the company from a total of $346 million of bank liabilities and all associated corporate guarantees have been fully released.
Contrary to many of our peers, this was achieved without having to resort court protections or diluting the shareholders. Lastly, the Company’s listing on NASDAQ Stock Market has been fully preserved. Additionally, a number of important transactions have been agreed with our major shareholders after the end of the first quarter.
In June of 2014, as part of the Company’s balance sheet strengthening efforts, certain of our major shareholders have made a cash contribution in Seanergy in return of newly issued shares apart from supporting our equity position of this interim period. This transaction shows the confidence of our shareholders in the Company’s strategy and long-term growth prospects. These particular shareholders now own 50.1% of the Company’s outstanding stock.
Secondly, as previously announced, our major shareholders have agreed to contribute four modern Capesize vessels to the Company in exchange for newly issued common shares. The current net asset value of the four Capesize vessels is estimated at approximately $90.4 million. Pursuant to the terms of the relevant purchase agreement, the completion of the transaction is expected to take place by the end of the third quarter.
As a result, these transactions -- as a result of this transaction, Seanergy will be well positioned to grow based on the favorable fundamentals we are currently seeing in the Capesize sector, while our long-term compliance to NASDAQ listing is fully ensured.
We will now go briefly over our first quarter results. For the three months ended March 31, 2014, our net revenues were $2 million, down 64% compared to the same period last year. The decrease reflects the operation of a smaller fleet, as an average of 3 vessels were owned in the first quarter of 2014 compared to 9.3 in the same period last year.
EBITDA was $84.7 million for the first quarter of 2014 as compared to $3.8 million in the same period of 2013. Net income in the first quarter of 2014 increased to $83.5 million or $6.98 per share in the first quarter of 2014, from $1.1 million or $0.09 per share in the first quarter of 2013. The significant increase in our profitability is attributed to the gain of $85.5 million that was realized on the sale of the four vessels during the first quarter of 2014.
Turning to general market conditions, 2014 is shaping up to be a better year than 2013, [possessing] that last year likely marked the bottom of the dry bulk market. Growth in the volume of trade continues to be strong, whereas vessel deliveries until the end of May had slowed by approximately 31% in respect of deadweight tonnage as compared to the same period last year.
This has been reflected in the charter market as during the first quarter of 2014, the daily average of the BDI was selling 2% higher than the same period of 2013. In the Capesize vessel in particular, the daily average of spot rates have been around 16,300 in the first quarter of the current year as opposed to 6,100 in the same period of 2013. Year-to-date, the same figure was approximately 14,100 as compared to the same period last year of 6,300, up 125%.
It is also encouraging to note that year-to-date we have seen 46 (indiscernible) deals being concluded with Capesize vessels as opposed to 33 deals in the full-year of 2013. The [faster] charters are actively looking to secure long-term performance to signify the considerable shift in the underlying market fundamentals and future expectations. Furthermore, new building orders for dry bulk vessels have fallen above 30% year-to-date in 2013. Our shipyard started to raise prices for new buildings. Prospective investors are less likely to engage in this kind of ordering frenzy that we showed in the past years.
In China, policies aimed at controlling excessive lending as well as the emphasis placed on shifting the focus of economy to consumption and infrastructure growth is expected to lead to steady growth in the following years, which will likely boost 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.
As a result, the seaborne iron ore trade is projected to expand by 10% in 2014, which will make it the most important driver of the dry bulk market performance this year. This, along with the high level of bunker fuel prices, drive to contribute in an environment where larger ships are likely to outperform smaller ships. It is therefore evident that the contribution of four modern Capesize vessels to our company is a very important first step in our development and is likely to underpin healthy future growth.
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 to be positioned favorably to take advantage of such transactions with optimal (indiscernible) and a renowned commercial management. I am looking forward to present these opportunities to our investors which I expect will generate significant returns. Thank you very much for listening to our call.
Would you like me to poll for questions for you now, sir?
Yes, please. Yes.
Thank you very much. (Operator Instructions) Mr. Tsantanis, I repeat we have no questions at this time, sir. So, I shall pass the floor back to you for closing remarks.
Yes. Well, I’d like to thank our investors once again for taking the time and listening our call. We are looking forward to present our second quarter financials in the next few weeks. And basically the company in this hindering period will have no (indiscernible) until the completion of the announced transaction. This is expected to happen by the end of the third quarter. So, thank you very much for listening to our call, and we’ll keep you posted of all the developments regarding Seanergy in the next few weeks. Thank you.
And with many thanks to our speaker today, that does conclude the conference. Thank you for participating. You may now disconnect. Thank you, sir.
Bye-bye. Thank you.
Thank you. Bye-bye.
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