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• Adjusted Net Loss of $4.0 million, which excludes non-cash losses of $2.3 million incurred on the sale of a vessel. For more information we refer you to the EBITDA and adjusted EBITDA reconciliation section contained in this press release. Management Discussion: Dale Ploughman, the Company’s Chairman and Chief Executive Officer, stated: “The first quarter of 2012 was dominated by a difficult market environment that adversely impacted our financial performance. Quarterly net loss was impacted by a $2.3 million noncash loss on the sale of the African Zebra, the oldest vessel in our fleet. On a positive note, due to the implementation of cost-cutting measures initiated in 2011, administrative expenses were down by approximately 23% this quarter as compared to the first quarter of 2011, management fees were reduced by 22% and vessel operating expenses were decreased by 3%. Lower operating and financial expenses reduced the impact of a 31% decline in revenues on adjusted net income. We are confident that cost reduction measures will continue to have a positive impact on Seanergy’s cash flow and profit margins going forward, as the shipping market may improve a little in the second half of the year. Furthermore, the finalization of the amendments of certain of our loan agreements over the course of the first quarter 2012 and the capital injection of $10 million by our major shareholders had a positive impact on our balance sheet. As the continuing weak market environment is contributing to a fall in asset prices, we believe that there are likely to be more opportunities for accretive growth. As far as the market outlook is concerned, as we had expected the first quarter was a challenging one, with the Baltic Dry Index (“BDI”) reaching a 25-year low of 647 points on February 3. Significant factors were newbuilding deliveries in January that were at the highest levels ever leading to significant market oversupply, celebrations of the Chinese New Year that started two weeks earlier than usual and led to reduced demand in an already oversupplied market and weather related issues in Brazil resulting in lower iron ore exports, thereby further reducing demand for vessels. The BDI has already risen by 60% since the lows seen in February and we believe that the second half of the year will be a little stronger. We expect that higher port congestion and reduced average vessel speed will contribute to the restriction of vessel supply which may, lead to considerable volatility in freight rates. On the demand side, the inventory cycle should lead to a need for raw material re-stocking, while ton mile demand is likely to increase as more dry bulk commodities will start being sourced from places such as the African continent, and even North America. Lastly, it is encouraging that newbuilding ordering activity is sharply lower, as approximately 49% fewer orders have been contracted this year compared to the corresponding period last year. However, we believe it would be far more prudent to desist from ordering altogether. The vessels’ delivery schedule will start dropping off from 2013 onwards, as this year is likely to mark the peak in newbuilding deliveries. Faster economic growth, changes in trade patterns and increased scrapping activity will speed up the absorption of excess tonnage but only if owners do not place new orders. As market expectations are currently very low, we believe that such developments would have the capacity to lead to a significant pick-up in freight rates. For 2012, Seanergy will continue to fix vessels on both long and short term employment in order to maintain a diversified exposure to market fluctuations. As the market is currently at low levels we would be reluctant to commit our vessels for the long term at fixed rates and would generally opt for index linked or profit sharing employment instead.” Christina Anagnostara, the Company’s Chief Financial Officer, stated: “Over the first quarter of 2012 we witnessed a particularly unfavorable dry-bulk market that resulted in a 31% reduction in Seanergy’s revenue when compared to the same quarter of 2011, as earnings of vessels employed under floating rate contracts and on short term charter parties reflect the weak spot market conditions. Adjusted Net Loss of $4 million in the first quarter of the current year increased compared to the first quarter of 2011 mainly as a result of a 34% decrease in the average Time Charter Equivalent (“TCE”) rate earned by our vessels, from $14,563 to $9,546. The amendments to certain terms of our loan facilities, executed during the quarter, will positively affect our capital commitments for the year. As of March 31, 2012 our outstanding debt was $325.7 million and our cash reserves amounted to $29.3 million. As of the date of this press release, the Company has secured employment for 77% of its ownership days for 2012 and 23% for 2013.” First Quarter 2012 Financial Results: Net Revenues Net Revenues in the first quarter of 2012 decreased to $17.4 million from $25.2 million in the same quarter in 2011, a reduction of 31%. Reduced net revenue was a result of the pronounced dry-bulk market weakness, as the average of the BDI over 1Q 2012 fell by 37% compared to the first quarter of 2011. EBITDA, Adjusted EBITDA EBITDA was $2.5 million for the first quarter of 2012 as compared to $12.9 million in the same quarter in 2011. The decrease in EBITDA for the first quarter of 2012 was mainly a result of the decline in revenue. Adjusted EBITDA, which excludes non cash losses incurred on the sale of the African Zebra, was equal to $4.9 million. For more information we refer you to the EBITDA and adjusted EBITDA reconciliation section contained in this press release. Net Loss For the first quarter of 2012, Net Loss amounted to $6.4 million or $0.54 per basic and diluted share, as compared to a Net Loss of $1.5 million or $0.21 per basic and diluted share, in the same quarter of 2011, based on weighted average common shares outstanding of 11,803,933 basic and diluted for 2012; 7,314,931 basic and diluted for 2011, on a reverse split adjusted basis. The loss is primarily the result of a 34% decrease in TCE to $9,546 per day in the first quarter of 2012 from $14,563 per day in the same quarter of 2011. Debt Repayment and capital expenditure requirements for 2012 Seanergy ended the first quarter of 2012 with $325.7 million of outstanding debt. This reflects a reduction of $20.7 million during the quarter, primarily due to the repayment of principal installments. Scheduled repayment of debt principal is expected to reach $29 million over the next three quarters of 2012. In terms of maintenance capital expenditure, we expect to incur approximately $2.6 million in drydocking costs for the remainder of 2012. First Quarter Developments: Financial Developments The Company entered into amendments to certain terms of the loan agreements with Marfin Egnatia Bank SA (“Marfin”) and Citibank International plc (“Citi”). As part of the lenders’ agreement, the Company entered into a share purchase agreement with four entities affiliated with members of the Restis family, the Company’s major shareholders, for an equity injection of $10 million. As part of the equity injection plan the four Restis affiliated entities purchased an aggregate of 4,641,620 common shares of the Company in exchange for $10 million. The common shares were issued by the Company on January 31, 2012 at a price equal to the average closing price of five trading days preceding the execution of the agreement, or $2.15442 per share. Marfin extended the revolving and term facilities’ maturity date from 2015 to 2018, deferred principal debt payments originally falling due in 2012 and amended the facilities’ installment profiles. Furthermore, the Company received an extension of the waiver on the Company’s security margin covenant for the period from January 3, 2012 through January 1, 2014, and the Company received a waiver of all other financial covenants until January 1, 2014. The applicable margin on both facilities was increased by 50 basis points per annum. Additionally, Marfin waived all previous covenant breaches. On the syndicated loan facility of Bulk Energy Transport (Holdings) Limited (“BET”), the Company’s subsidiary, with Citi as agent of the syndication of lenders, Citi waived all covenants for the period up to and including January 1, 2013 as well as all previous covenant breaches. The waiver excludes the security requirement to security value covenant which was amended from 125% to 100% and will be tested quarterly. Furthermore, the applicable margin was increased by 100 basis points per annum. The Company classifies the Citibank long term debt as non-current as of March 31, 2012. In the case that the Company will not be in compliance with its covenants after January 1, 2013, and the lenders will not extend the existing waiver, the BET debt may need to be classified as current. Sale of the African Zebra Seanergy sold the African Zebra to an unaffiliated third party for a gross price of $4.1 million. The vessel was delivered to her new owners on February 15, 2012. The African Zebra was a 38,632 dwt Handymax bulk carrier built in 1985 and the Company used the proceeds to reduce debt outstanding under the Marfin term loan facility. The sale resulted in a book loss of approximately $2.3 million. Following the sale of African Zebra, the Company's fleet consists of four Capesize, three Panamax, two Supramax and ten Handysize dry bulk carriers with an average age of 13.9 years. Drydocking and Maintenance Schedule The Clipper Glory’s scheduled drydocking commenced on January 4, 2012 and was completed on January 17, 2012 at a cost of approximately $0.4 million. Fleet Employment Seanergy entered into an agreement with MUR Shipping BV (“MUR”) to extend the time charter party for the Company’s Handysize vessel African Joy, in direct continuation from the end of the minimum period of the previous time charter party of the vessel with MUR. The charter has been extended for a period of eleven to thirteen months at a gross charter rate linked to the adjusted Time Charter Average of the Baltic Handysize Index (BHSI). Employment under the extension commenced on January 31, 2012. As of today, the Company has secured employment for 77% of its ownership days for 2012 and 23% for 2013. About Seanergy Maritime Holdings Corp. Seanergy Maritime Holdings Corp. is a Marshall Islands corporation with its executive offices in Athens, Greece. The Company is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. The Company’s current fleet consists of 19 dry-bulk carriers (four Capesize, three Panamax, two Supramax, and ten Handysize vessels) with a total carrying capacity of approximately 1,257,236 dwt and an average fleet age of 13.9 years. The Company's common stock trades on the NASDAQ Global Market under the symbol “SHIP”. Seanergy Maritime Corp. press release |
Seanergy Maritime Holdings Corp. reports financial results for the Quarter Ended March 31, 2012