Seanergy announced its financial results for the first quarter ended March 31, 2019.
Highlights of the First Quarter of 2019:
- Net revenues: $16.0 million in Q1 2019, compared to $21.3 million in Q1 2018
- Net loss: $8.6 million in Q1 2019, as compared to net loss of $3.4 million in Q1 2018
- EBITDA1: $0.4 million in Q1 2019, as compared to $4.6 million in Q1 2018
- Follow-on public equity offering and concurrent private placement with gross proceeds of $20.5 million
- Commencement of the Company’s scrubber installation program
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.”
|Year Built||Yard||Scrubber Fitted (1)||Employment||Initial Charter
|3 years after
|Championship (3)||Capesize||179,238||2011||Sungdong||Yes||T/C Index
|3 years after
|3 years after
|3 years after
|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.
|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
(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|
(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 expenses
before pre-delivery expenses
|Daily Vessel Operating Expenses||4,830||5,114|
Net Loss to EBITDA Reconciliation:
(In thousands of U.S. Dollars)
|Q1 2019||Q1 2018|
|Add: Net interest and finance cost||6,236||5,141|
|Add: Depreciation and amortization||2,834||2,939|
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)
|Cash and restricted cash||7,472||7,444|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Bank debt and other financial liabilities||192,459||195,221|
|Due to related parties||24,350||19,349|
|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,|
|Vessel revenue, net||16,013||21,322|
|Vessel operating expenses||(4,422||)||(5,063||)|
|General and administrative expenses||(1,686||)||(1,552||)|
|Depreciation and amortization||(2,834||)||(2,939||)|
|Operating (loss) income||(2,434||)||1,742|
|Interest and finance costs||(6,256||)||(5,141||)|
|Total other expenses, net:||(6,209||)||(5,184||)|
|Net loss per common share, basic||(3.23||)||(1.40||)|
|Weighted average number of common shares outstanding, basic||2,674,885||2,458,473|