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Fourth Quarter 2010 • Net Revenues of $25.9 million • EBITDA of $10.7 million • Net Loss of $2.6 million Year Ended 2010 • Net Revenues of $95.9 million • EBITDA of $47.3 million • Net Income of $1.6 million (before noncontrolling interest) Management Discussion: Dale Ploughman, the Company’s Chairman and Chief Executive Officer, stated: “We are pleased with the annual and quarterly results that we are reporting. The fourth quarter of 2010 saw the successful implementation of our plan to grow Seanergy’s fleet as we completed the acquisition of the remaining 50% ownership interest in Bulk Energy Transport (Holdings) Limited (“BET”) in October 2010. This year therefore set an important milestone for our company, as the consolidation of our ownership interests in BET and Maritime Capital Shipping Limited (“MCS”) more than tripled our wholly owned fleet from an initial base of six vessels with a carrying capacity of 316,676 deadweight tons to a total of 20 vessels with a carrying capacity of 1,293,105 deadweight tons. It is of particular importance that we have achieved the above by acquiring assets at favorable prices, as we paid approximately $95 million in 2010, of which only $43 million was in the form of cash and the remainder was in the form of shares. This way, we believe that we managed to increase our earnings potential while maintaining a strong balance sheet and we therefore believe we remain well positioned to invest in further opportunities to acquire vessels that we believe will be accretive to our earnings. Furthermore, gaining exposure to all segments of the dry bulk industry has, in our view, enhanced the operational flexibility of our fleet. We have significant time charter coverage with reputable charterers, which we believe provides cash flow stability and a degree of protection against the volatile freight rate environment, coupled with upside potential, as five of our vessels in total operate under profit sharing arrangements that allow us to participate in market upswings. The fourth quarter of 2010 was characterized by freight market deterioration that continued into the new year, as the extended flooding in Australia led to disruption in coal trade that we previously viewed as providing support to freight rates up until that time, especially for larger vessel segments. As the situation unfolds in Australia, we believe it is possible that short term disruptions will subside and that freight rates may revert to normality. We believe that long term dry bulk fundamentals remain solid as world industrial production is poised to continue growing due to growth witnessed in emerging markets. According to the International Monetary Fund, growth in emerging markets is expected to continue at the same pace and estimates for US GDP growth were revised upwards on the back of improved consumer demand. The major downside risk for dry bulk shipping remains the issue of vessel oversupply. Vessels scheduled for 2011 delivery represent about 25% of the current dry bulk fleet, yet much of that comes from 2010 deliveries that were pushed back due to lack of sufficient funding available to ship owners. In 2010 slippage amounted to about 40% of the orderbook and we believe that the trend is poised to continue as financing for new vessels is increasingly hard to attain for all but the most solid companies in the sector. Furthermore, the vast majority of the order book represents orders contracted before 2009, at prices considerably higher than current market levels therefore making them poor investments considering current conditions. In addition, scrapping activity in the first month of 2011 has been much higher than the comparable period in 2010, according to industry sources. High prices paid for scrap sales (around $500 / LDT in 2011) combined with the recent fall in freight rates have contributed to this trend and are expected to further increase demolitions, especially as Bangladeshi yards start coming online later in the year.” Christina Anagnostara, the Company’s Chief Financial Officer, stated: “We believe that 2010 was a good year for Seanergy, as we increased our owned fleet to 20 vessels and our total assets from $538.5 million at the end of 2009 to $696.4 million at the end of 2010. As of December 31, 2010, our cash reserves were $64.2 million, reflecting $31.5 million in cash generated from operations. In the fourth quarter of 2010, our company operated a fleet of 20 vessels earning a time charter equivalent (“TCE”) rate of $15,277 as compared to an average of 11 vessels and TCE rate of $17,331 during the fourth quarter of 2009. The decreased TCE results from lower market imposed time charter rates earned by our vessels, whose original charter agreements expired during 2009. Furthermore, we have accelerated the drydocking for three vessels initially scheduled for 2011 to the third and fourth quarters of 2010. As a result of the timing of these inspections, Seanergy incurred more off-hire days than expected during the fourth quarter of 2010, resulting in lower revenues and higher operating expenses than anticipated. Our vessels have secured period employment of 79% for 2011, 38% for 2012 and 19% for 2013. For the year ended 2010, our company operated a fleet of 16.6 vessels on average, earning a TCE rate of $16,532 as compared to an average of 7.9 vessels and TCE rate of $32,909 during 2009. In 2010, our daily vessel operating expenses decreased to $5,077 from $5,603 in 2009, and daily general and administrative expenses decreased to $1,375 in 2010 from $2,304 in 2009.” Fourth Quarter 2010 Financial Results: Net Revenues Net Revenues for the fourth quarter of 2010 increased to $25.9 million from $17.3 million in the same quarter in 2009. The increase in revenues, despite earning a lower average TCE rate, reflects the increased size of our fleet, which resulted in additional operating days. EBITDA, Operating Income EBITDA was $10.7 million for the fourth quarter of 2010 as compared to $7.4 million in the same quarter in 2009. Operating income amounted to $1.1 million for the three months ended December 31, 2010, as compared to an operating income of $0.8 million for the same quarter in 2009. The rise in EBITDA and operating income in the fourth quarter was mainly a result of revenue growth, which was adequate to offset the effects of higher operating expenditures and depreciation expense. Please refer to the EBITDA reconciliation section, contained in this press release. Net Loss For the fourth quarter of 2010, Net Loss amounted to $2.6 million, or $0.02 per basic and diluted share, as compared to Net Loss of $3.2 million, or $0.10 per basic and diluted share, in the same quarter of 2009, based on weighted average common shares outstanding of 109,723,980 basic and diluted for 2010; 33,255,170 basic and diluted for 2009. The loss is primarily the result of a 12% decrease in TCE to $15,277 per day in the fourth quarter of 2010 from $17,331 per day in the same quarter of 2009, as well as an increase in net interest expense to $3.8 million from $2.3 million. Year Ended 2010 Financial Results: Net Revenues Net Revenues for the year ended December 31, 2010 were $95.9 million as compared to $87.9 million in the same period in 2009. Our vessels earned a lower average TCE rate during 2010, yet this was counteracted by the increase in the number of operating days associated with the growth in the size of our fleet. EBITDA, Operating Income EBITDA for the twelve months ending December 31, 2010 was $47.3 million as compared to $66.6 million in the previous year. Operating Income amounted to $18.4 million for the year ended December 31, 2010, as compared to operating income of $40.4 million for the same period in 2009. The decrease in operating income came as a result of increased operating and voyage expenses, as well as increased depreciation and dry docking expenses associated with operating a larger fleet. For 2010, operating expenses increased to $30.7 million, from $16.2 million in the previous year. Net Income Net Income for 2010 amounted to $1.6 million before non controlling interest. Net Income attributable to Seanergy was $0.1 million, or $0.00 per basic and diluted share for the period ended December 31, 2010, as compared to Net Income of $30.0 million, or $1.16 per basic and $1.00 per diluted share, for the same period in 2009, based on weighted average common shares outstanding of 87,916,947 basic and diluted for 2010 and 25,882,967 and 30,529,281 basic and diluted for 2009, respectively. The decrease in net income is the result of lower operating income earned in 2010, combined with higher interest expenses and losses on interest rate swaps. In particular, net interest and finance costs increased to $12.6 million in 2010, from $7.2 million in 2009 due to additional interest expense charges relating to MCS loan facilities. Losses on swap agreements for 2010 rose to $4.2 million from $1.6 million in 2009. Operating Cash Flow and Cash Flow from Investments In 2010, Seanergy generated $31.5 million of cash from operations, as opposed to $43.2 million in 2009. The decrease is mainly attributable to lower net income earned in the current year. Investment cash inflows for 2010 amounted to $7.9 million, as compared to $36.4 million in 2009. Positive cash flows reflect the cash acquired as part of the MCS and BET transactions, in 2010 and 2009. Debt Repayment and capital expenditure requirements for 2011 Seanergy ended 2010 with $399.5 million of outstanding debt, as compared to $300.6 million at the end of 2009. The increase is associated with additional debt assumed through the acquisition of the MCS fleet. Repayment of principal on our debt facilities is expected to reach $53.4 million over the course of 2011. In terms of maintenance capital expenditure, we expect to incur about $4.1 million in drydocking costs for the year ending 2011. Detailed report at: www.seanergymaritime.com About Seanergy Maritime Holdings Corp. Seanergy Maritime Holdings Corp., the successor to Seanergy Maritime 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 initial fleet comprised two Panamax, two Supramax, one Handymax and one Handysize dry bulk carriers that Seanergy purchased and took delivery of in the third quarter of 2008 from companies associated with members of the Restis family. In August 2009, the Company acquired a controlling interest in BET, which owns four Capesize and one Panamax dry bulk carriers. In May 2010, the Company acquired a controlling interest in MCS, which owns nine Handysize dry bulk carriers. In September 2010, the Company completed the acquisition of the remaining 49% in MCS, and in October 2010 the Company completed the acquisition of the remaining 50% in BET. Following the MCS and BET acquisitions, the Company has a wholly-owned operating fleet of 20 drybulk carriers (four Capesize, three Panamax, two Supramax, one Handymax and ten Handysize vessels) with a total carrying capacity of approximately 1,293,105 dwt and an average fleet age of 13 years. The Company's common stock and warrants trade on the NASDAQ Global Market under the symbols “SHIP” and “SHIP.W”, respectively. Seanergy Maritime Corp. press release |
Seanergy Maritime Holdings Corp. Reports Financial Results