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First Quarter 2011 • Net Revenues of $25.2 million • EBITDA of $12.9 million • Net Loss of $1.5 million Management Discussion: Dale Ploughman, the Company’s Chairman and Chief Executive Officer, stated: “Against challenging conditions, with the BDI down 50% from Q1 2010, Seanergy’s strategy of securing long term agreements with reputable charterers, as well as the fact that we have been operating a larger fleet this year, effectively insulated our revenues from the worsening market environment seen during the first quarter of the year. In accordance with our strategy, we were able to secure long term employment for one of our Panamax vessels at a higher rate than current market levels, which further enhances our cash flow visibility over the next year. We believe that our strong period charter coverage for the next two years can minimize the effect of short term freight rate volatility. Furthermore, we expect that our current cash position might afford us the opportunity to engage into accretive acquisitions as the continuing weak market conditions might translate in lower asset purchase prices. Over the first quarter of 2011 a number of factors contributed to a difficult operating environment characterized by low freight rates and heightened uncertainty. Unexpected events such as the recent storms in Australia and the natural disaster in Japan have affected shipping activity while the seasonal decrease in trade attributable to the Chinese New Year celebrations reduced demand and maintained the negative pressure on freight rates. Furthermore, persistent fiscal worries in developed countries and the monetary tightening taking place in most major Asian countries are generating increased economic uncertainty. Under these circumstances the large number of vessels entering service in 2011 has proved difficult to absorb while the large outstanding orderbook is creating a supply overhang that could prevent a sustained rebound in freight rates. It seems that the following months are going to be characterized by volatile conditions, as there are a multitude of factors that can affect the market, which are hard to predict. Looking beyond short term uncertainty however, it is our belief that long term fundamentals in dry bulk shipping remain solid and that Seanergy is well positioned to continue its growth.” Christina Anagnostara, the Company’s Chief Financial Officer, stated: “During the first quarter of 2011 the Company operated 20 fully owned vessels. We are pleased to report a 38% increase in revenues for the first quarter of 2011 as compared to the same quarter in 2010. We believe that the end of the first quarter of 2011 finds Seanergy in a solid balance sheet position. Our cash balance and future contracted revenue stemming from our charters puts us in a position that we believe will permit us to cover all capital commitments for the coming year while allowing us to pursue further growth. The loss experienced in the first quarter is a result of lower average time charter equivalent (“TCE”) rates earned by our vessels and higher depreciation, amortization and financial expenses as compared to the first quarter of 2010. The increased size of our fleet compared to the same period last year nevertheless helped us increase revenues even amidst such adverse market conditions. As of the date of this press release, our vessels have secured period employment of 85% for 2011, 40% for 2012 and 19% for 2013.” First Quarter 2011 Financial Results: Net Revenues Net Revenues for the first quarter of 2011 increased to $25.2 million from $18.2 million in the same quarter in 2010. 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 $12.9 million for the first quarter of 2011 as compared to $10.7 million in the same quarter in 2010. Operating income amounted to $2.4 million for the three months ended March 31, 2011, as compared to an operating income of $5.2 million for the same quarter in 2010. The EBITDA increase in the first quarter of 2011 was mainly a result of revenue growth, which was adequate to offset the effects of higher operating expenses. Please refer to the EBITDA reconciliation section contained in this press release. Net Loss/Profit For the first quarter of 2011, Net Loss amounted to $1.5 million or $0.014 per basic and diluted share, as compared to Net Profit of $0.1 million, or $0.002 per basic and diluted share, in the same quarter of 2010, based on weighted average common shares outstanding of 109,723,980 basic and diluted for 2011; 49,347,837 basic and diluted for 2010. The loss is primarily the result of a 20% decrease in TCE to $14,563 per day in the first quarter of 2011 from $18,314 per day in the same quarter of 2010, which resulted in lower operating income. Operating Cash Flow In the first quarter of 2011, Seanergy generated $2.6 million of cash from operations, as opposed to $7.4 million in the first quarter of 2010. The decrease is mainly attributable to lower net income earned in the current year as well as to the timing of vessels’ dry docking payments. Debt Repayment and capital expenditure requirements for 2011 Seanergy ended the first quarter of 2011 with $388.4 million of outstanding debt. This reflects a reduction of $11.1 million during the quarter, owing to repayment of principal installments. Repayment of principal on our debt facilities is expected to reach $42.3 million over the three last quarters of 2011. In terms of maintenance capital expenditure, we expect to incur approximately $3.1 million in drydocking costs for the remainder of 2011. Subsequent Events: Financial Developments With respect to our loan agreement with Citibank International Plc, we have requested a retroactive waiver, and our lender has retroactively waived, pursuant to a fourth supplemental agreement dated March 31, 2011, our minimum equity ratio requirement as of December 31, 2010. The supplemental agreement also provides for the temporary reduction of the minimum equity ratio requirement from 0.3:1.0 to 0.175:1.0 for the period from December 31, 2010 through and including December 31, 2011 and an adjustment of the applicable margin to 2% per annum for the period between January 1, 2011 and December 31, 2011. As of March 31, 2011, the Company did not comply with the financial covenant relating to the minimum quarterly cash balance requirement Seanergy is obliged to maintain under the loan agreement with Marfin Egnatia Bank. The Company has requested a waiver and/or amendments of certain financial and other covenants of the particular loan agreement. The Company expects that the request will be granted, thus the presentation of the long term debt in the attached consolidated financial statements assumes that the waiver will be granted and accordingly all of the Company’s long term debt continues to be classified as non-current as of March 31, 2011. In case the waiver is not granted, then the Marfin debt will be required to be classified as current. Drydocking and Maintenance Schedule The M/V African Zebra’s scheduled drydocking commenced on January 4, 2011 and was completed on February 28, 2011. The total estimated cost of the M/V African Zebra’s drydocking is approximately $1.4 million. The M/V Davakis G.’s scheduled drydocking commenced on March 18, 2011 and was completed on April 2, 2011. The total estimated cost of the M/V Davakis G.’s drydocking is approximately $0.5 million. The M/V African Oryx’s drydocking commenced on May 14, 2011 and is expected to be completed by end of May 2011. The total cost of the M/V African Oryx’s drydock is estimated to be approximately $0.5 million. Fleet Employment As of today, the Company has secured under employment 85% of its operating days for 2011, 40% for 2012 and 19% for 2013. Time Charter Employment Pursuant to the charter party agreement dated February 18, 2011, the M/V Bremen Max was chartered with Glencore Grain BV (Rotterdam) for a period of about eleven (11) to about thirteen (13) months at a gross daily rate of $20,000. The rate includes a 1.25% brokerage commission payable to each of Safbulk (PTY) LTD and Arrow Chartering and a charterer’s commission of 3.75%. The vessel’s employment under the time charter agreement commenced on February 23, 2011. Subsequent Events: Vessels under Spot Employment Pursuant to the charter party agreement dated April 7, 2011, the M/V Davakis G. was chartered with MUR Shipping Denmark A/S for a time charter trip at a gross daily rate of $29,250. The rate includes a 1.25% brokerage commission payable to Safbulk (PTY) LTD and a charterer’s commission of 3.75%. The vessel’s employment under the spot time charter commenced on April 16, 2011. Pursuant to the charter party agreement dated April 8, 2011, the M/V Delos Ranger was chartered with A/C Mansel Ltd. for a time charter trip at a gross daily rate of $17,000. The rate includes a 1.25% brokerage commission payable to each of Safbulk (PTY) LTD and Arrow Chartering and a charterer’s commission of 3.75%. The vessel’s employment under the spot time charter commenced on April 16, 2011. Full report at: www.seanergymaritime.com Seanergy Maritime Corp. press release |
Seanergy Maritime Holdings Corp. Reports Financial Results