Seanergy Maritime’s Capesize Strategy Yields Record-Breaking First Half Results

Seanergy Maritime Holdings Corp., announced yesterday its financial results for the second quarter and six months ended June 30, 2024. The Company also declared a quarterly cash dividend of $0.25 per common share for the second quarter of 2024 and announced an updated dividend policy targeting the distribution of approximately 50% of operating cash flow after debt service.

For the quarter ended June 30, 2024, the Company generated Net Revenues of $43.1 million, compared to $28.3 million in the second quarter of 2023, representing an increase of 52%. Adjusted EBITDA for the quarter was $28.0 million, 78% higher than $15.7 million in the same period of 2023. Net Income and Adjusted Net Income for the quarter were $14.1 million and $16.0 million, respectively, compared to Net Income of $0.7 million and Adjusted Net Income of $3.3 million in the second quarter of 2023. The daily TCE rate of the fleet for the second quarter of 2024 was $26,636, compared to $18,708 in the same period of 2023.

For the six-month period ended June 30, 2024, the Company generated Net Revenues of $81.4 million, compared to $46.4 million in the same period of 2023, marking an increase of 75%. Net Income and Adjusted Net Income for the six months were $24.3 million and $27.6 million, respectively, compared to Net Loss of $3.5 million and Adjusted Net Income of $2.9 million in the respective period of 2023. Adjusted EBITDA for the six months was $51.2 million, compared to $19.6 million for the same period of 2023. The daily TCE rate of the fleet for the first six-month period of 2024 was $25,365, compared to $14,756 in the same period of 2023. The average daily OPEX was $6,999 compared to $6,921 of the respective period of 2023.

Cash and cash-equivalents and restricted cash, as of June 30, 2024, stood at $38.2 million. Shareholders’ equity at the end of the second quarter was $254.7 million. Long-term debt (senior loans, finance lease liability and other financial liabilities) net of deferred charges stood at $247.6 million, while the book value of the fleet, including a chartered-in vessel and the advance for vessel acquisition, was $466.3 million.

Stamatis Tsantanis, the Company’s Chairman & Chief Executive Officer, stated:

“Seanergy generated record profitability in the second quarter and first half of 2024 as a result of the execution of our successful strategy to position the Company as a leading dry bulk operator with a pure-play Capesize fleet. The Capesize sector continued to perform more strongly than the other dry bulk asset classes, and Seanergy overperformed the Capesize index both in the second quarter and in the first half of the year. The daily TCE of our fleet was $26,636, representing a premium of about 18% compared to the $22,600 average of the Baltic Capesize Index for the period. Our active hedging plan was a main driver of this outperformance.

“Consistent with our proven strategy of returning capital to shareholders while balancing fleet growth and maintaining a strong balance sheet, our board of directors has adopted an updated dividend policy which further increases our focus on returning capital to our shareholders. Under our updated dividend policy, which targets distribution of approximately 50% of our operating cash flow after debt service, our quarterly dividend increases to $0.25 per share for the second quarter of 2024. Additionally, we resumed our stock repurchases and I have also purchased, in the open market, common shares and call options to purchase Seanergy stock in the coming quarters. Based on our strong and visible cash flow generation, we expect to be able to continue returning significant capital to our shareholders in the coming quarters.

“In terms of fleet updates, in 2024 to date, we have agreed to acquire two Capesize vessels which are, on average, younger than our current fleet. In June, we took delivery of the 2013-built M/V Iconship, with the vessel immediately commencing employment on an index linked time-charter with an earliest expiry date in March 2026. Furthermore, we expect to take delivery of a 2012 built Capesize, that will be renamed M/V Kaizenship, within the third quarter. Following these additions, our fleet will consist of 19 Capesize vessels, up from 17 at the start of 2024. We are pleased with the steady growth we are delivering, while also increasing dividend payments and stock repurchases.

“Moreover, during the quarter we entered a new $58.3 million financing agreement for the recently delivered M/V Iconship. We also refinanced a previous sale and leaseback facility secured by two of our vessels at a lower interest rate. On a net debt basis our loan-to-value ratio at the end of the quarter stood comfortably below 40%, highlighting the continued strength of our balance sheet.

“Regarding our guidance for the third quarter of 2024, we have fixed approximately 42% of our available days at an average gross rate of $29,500 which compares favorably with the performance of the BCI to date. Based on current FFA levels, our TCE is estimated to be approximately equal to $25,500. Lastly, for the second half of the year we have fixed 39% of our fleet’s days at a gross rate of $29,300.

“Concluding with our views on the market, Capesize earnings under the BCI have averaged about $24,000 year to date, at the traditionally weakest half of the year. This points to the strength of the market, which is based on the very low vessel ordering during the previous years. It is encouraging to note that the Capesize orderbook stands at a very low level by historical standards, especially when considering the need for fleet renewal necessitated by the stringent regulations aimed at limiting CO2 emissions. As regards vessel demand, China iron ore and coal imports have risen by 7% and 12% respectively year to date, while the 8% rise in Brazilian iron ore exports has added considerable ton miles. Additionally, steadily growing West African Bauxite exports have contributed to Atlantic Basin cargo flows and kept Capesize demand at high levels. Lastly, taking a longer-term view, we are encouraged by the development of new projects that are expected to add further to ton-mile demand.

“Seanergy is well positioned to continue performing strongly amidst the favorable Capesize market fundamentals, and we will remain focused on delivering high shareholder returns while opportunistically growing our fleet.”

Second Quarter and Recent Developments:

Dividend Distribution for Q1 2024 and Declaration of Q2 2024 Dividend

On July 10, 2024, the Company paid a quarterly dividend of $0.025 per share and a special dividend of $0.125 per share, for the first quarter of 2024, to all shareholders of record as of June 25, 2024.

The Company has declared a quarterly cash dividend of $0.25 per common share for the second quarter of 2024 payable on or about October 10, 2024, to all shareholders of record as of September 27, 2024.

Updated Dividend Policy

In August 2024, our Board of Directors (“Board”) adopted an updated dividend policy, pursuant to which we intend to distribute approximately 50% of our operating cash flow (the amount presented in our Cash Flow Statement for the period in question, incorporating all operating expenses, variations in working capital, interest expenses and amounts paid for drydocking),

Less: Debt repayments (this amount captures loan facilities, finance lease liabilities and other financial liabilities),

Less: Discretionary quarterly reserve (this amount will be assessed by the Board on a quarterly basis taking into consideration, among other things, (a) the share buybacks completed during the quarter, (b) anticipated capital expenditures such as vessel acquisitions and (c) a targeted liquidity buffer).

Any future dividends declared will be at the discretion and remain subject to approval of the Board each quarter, after its review of our financial condition and other factors, including but not limited to our earnings, prevailing charter market conditions, capital requirements, limitations under our debt agreements and applicable provisions of Marshall Islands law. Seanergy’s dividend policy and declaration and payment of dividends may be changed at any time and are subject to legally available funds and the Board’s determination that each declaration and payment is at the time in the best interests of Seanergy and its shareholders after review of the Company’s financial performance. There can be no assurance that our Board will declare or pay any dividend in the future.

At-The-Market Offering Program

Since the issuance of the Company’s earnings release for the first quarter of 2024, the Company did not conduct any sales of common shares under the “at-the-market” equity offering program initiated in December 2023 with B.Riley as sales agent. As of the date of this release, $24.9 of the Company’s common shares remain to be sold under the program.

Buyback of Common Shares

Since the issuance of the Company’s earnings release for the first quarter of 2024, the Company repurchased 166,903 common shares in open market transactions at an average price of $10.56 per share for an aggregate consideration of $1.8 million pursuant to the $25.0 million share repurchase program commenced in December 2023. All the abovementioned shares were cancelled and removed from our share capital as of the date of this release. As of August 2, 2024, the Company had 20,611,924 common shares issued and outstanding.

Since the fourth quarter of 2021, the Company has completed $42.9 million in securities repurchases, consisting of (i) $6.0 million in common shares in open market transactions at an average price of $7.24 per common share and (ii) $36.9 million in convertible notes and warrants in private transactions and pursuant to a tender offer.

Open Market purchases of stock options and shares by the CEO

Seanergy’s Chairman & Chief Executive Officer, Mr. Stamatis Tsantanis, has recently purchased 600 call option contracts, allowing the purchase of up to 60,000 common shares of the Company upon expiration. The call option contracts have an average strike price of $11.7 and an expiration date of January 2025. During the same period, Mr. Tsantanis has purchased an additional 3,400 common shares of the Company in the open market through various dates at an average purchase price of $9.32 per common share.

Vessel Transactions and Commercial Updates

M/V Iconship – Delivery and New T/C agreement

In June 2024, the Company announced the delivery of the M/V Iconship, a 181,392 dwt Capesize bulk carrier, built in 2013 in Japan. At the same time, M/V Iconship commenced its T/C employment with Costamare Bulkers Inc. (“Costamare”), for a duration of minimum 21 months to about 24 months. The daily hire is based at a premium over the BCI. The Company has the option to convert the daily hire from index-linked to fixed for a period of 2 to 12 months based on prevailing Capesize FFA curve. The acquisition of the vessel has been financed with cash on hand and proceeds from the AVIC Sale & leaseback agreement mentioned below.

M/V Lordship – New T/C agreement

In June 2024, the M/V Lordship was fixed on a T/C with Costamare. Following the completion of the vessel’s scheduled drydocking, on July 31, 2024, the T/C commenced for a period of minimum January 1, 2026 to maximum May 31, 2026. The daily hire will be based on the 5 T/C routes of the BCI, while the Company has the option to convert the daily hire from index-linked to fixed for a minimum period of 2 months to a maximum of 12 months based on the prevailing Capesize FFA curve. The Company will also receive the majority of the benefit from the scrubber profit-sharing scheme based on the price difference between high-sulfur and low-sulfur fuel.

M/V Dukeship – Time charter extension

In July 2024, the charterer of the M/V Dukeship agreed to extend the time charter agreement in direct continuation from the previous agreement. The extension period commenced on July 24, 2024 for a duration of minimum June 30, 2025 up to maximum September 30, 2025. All main terms of the time charter remain materially the same.

M/V Fellowship – Time charter extension

In July 2024, the charterer of the M/V Fellowship agreed to extend the time charter agreement in direct continuation from the current agreement. The extension period will commence within October 2024 for a duration of minimum 20 months to about 24 months. All main terms of the time charter remain materially the same.

M/V Geniuship – Time charter extension

In June 2024, the charterer of the M/V Geniuship agreed to extend the time charter agreement in direct continuation from the previous agreement. The extension period commenced on July 19, 2024, for a duration of minimum June 2025 up to maximum September 2025. The daily hire is based at a revised premium over the BCI, while all other main terms of the time charter remain materially the same.

M/V Honorship – Time charter extension

In May 2024, the charterer of the M/V Honorship agreed to extend the time charter agreement in direct continuation from the previous agreement. The extension period commenced on May 30, 2024, for a duration of minimum March 16, 2025 to maximum July 15, 2025. The daily hire is based at a revised premium over the BCI, while all other main terms of the time charter remain materially the same.

Financing Updates

M/Vs Iconship, Hellasship, Patriotship – AVIC Sale & leaseback agreement

The Company entered into three separate sale and leaseback agreements of $58.3 million in aggregate with AVIC International Leasing Co. to refinance the existing debt of the M/Vs Hellasship and Patriotship, and to partially finance the acquisition of the M/V Iconship. The vessels have been sold and chartered back on a bareboat basis for a five-year period commencing on each delivery date. The Company has continuous options to repurchase the vessels at predetermined prices at any time of the bareboat charter. At the end of the bareboat period, Seanergy has the obligation to purchase the vessels for an aggregate amount of approximately $31.5 million. Each financing bears interest of 3-month term SOFR plus 2.55% per annum and the interest rate is approximately 120 bps lower than the rate of the refinanced sale and leaseback agreements. The aggregate charterhire principal for the three vessels will amortize through four quarterly installments of approximately $2.1 million, followed by sixteen quarterly installments of approximately $1.2 million.
Source: Seanergy Maritime