Ladies and gentlemen, thank you for standing by and welcome to the Seanergy Maritime Holdings Corporation Second Quarter and First Half 2022 Financial Call. Please be advised that today’s conference is being recorded. Please now turn to Slide 2 of the presentation. Many of the remarks today contain forward-looking statements based on the current expectations. Actual results may differ materially from the results projected from these forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the second quarter 2022 earnings release, which is available on the Seanergy website, www.seanergymaritime.com. I would now like to turn the conference over to your speaker today, Stamatis Tsantanis. Please go ahead, sir.

Hello. I would like to welcome everyone to our conference call. Today, we are presenting the financial figures for the second quarter and first 6 months of 2022. We are also pleased to announce the distribution of another cash dividend this quarter. The second quarter was another outstanding period in terms of financial performance for Seanergy, supported by a healthy Capesize market and our effective commercial strategy that balances reward and risk for our shareholders. There are various negative events on a global scale, such as the ongoing conflict in Ukraine, the fears about inflation and the ensuing risk of recession as well as the COVID-19 related lockdowns in China. However, our view is that the robust fundamentals of the Capesize sector will provide for solid market conditions despite these uncertainties. Let’s start with second quarter and first half highlights. During the second quarter, we recorded net revenue of $32.8 million and adjusted EBITDA of $17.3 million up 18% and 53% respectively, compared to the second quarter of 2021. Net income was equal to $5.9 million compared to $2 million in the second quarter of 2021. The positive financial performance was driven both by the increased size of our fleet and by the 16% increase in the time charter equivalent and by our vessels. For the first 6 months of 2022, net revenue reached $62.5 million, which represents a new record for Seanergy. Adjusted EBITDA climbed to $34.1 million, posting a year-on-year increase of 77%, while net income amounted to $9.6 million. We reaffirm our commitment to rewarding our shareholders through the declaration of another regular dividend of $0.025 per share for the second quarter and the new buyback plan for up to $5 million, which was recently announced. I will expand on the shareholders’ rewards deliverables in a minute.…

Thank you, Stamatis. I would like to welcome everyone from my side as well to our second earnings call for this year. Let us start by reviewing the main highlights of our financial statements for the second quarter and 6 months period that ended on June 30, 2022. Net vessel revenue for the quarter was equal to $32.8 million, marking an increase of 18% from the second quarter of 2021, while the increase in the 6-month period stands at 30%. Meanwhile, our daily time charter equivalent for the second quarter reached $23,250 16% higher compared to $20,000 in the second quarter of 2021. Our chartering and freight hedging strategy was effective once again as our 6-month time charter equivalent exceeded the average Baltic Capesize Index by 17% with this outperformance expected to sustain based on the floating to fixed conversions for 3 of our vessels during the third quarter at an average gross daily rate of $36,000. Adding in this, we anticipate a further decrease in our interest expenses after the completion of the refinancing of our last maturity for 2022, as I will describe in a moment. Of course, the rising momentum of InterBank interest rates is expected to partly offset the positive effect of this transaction. At the same time, cash and cash equivalents, including time deposits at the end of the second quarter stood at $43 million, which leads to a net debt of $219 million. Total book value of shareholders’ equity stood at $234 million. Adjusted EBITDA in the second quarter was approximately $17.3 million, up from $11.3 million in the same quarter of 2021. The 6-month adjusted EBITDA stood at $34.1 million with a year-over-year percentage increase reaching 77% over a 16% increase in a time charter equivalent, demonstrating once again our company’s operating leverage.…

Thanks, Stavros. Let’s now have a more extensive view of the Capesize demand and supply fundamentals. Seasonal patterns are noticeable in the freight market for yet another year with a usually low first half being followed by an improved second half. Traditionally, of course, the second half of the year is the strongest. The average level of the Baltic Capesize Index for the first 6 months of the year was approximately $18,100 per day with a low of $5,800 per day and a high of $38,200 per day. Although the average performance of the index is lower compared to 2021, it stands much higher than the 10-year average of the first half performance. Given the global events and uncertainties, the Capesize market has been quite resilient, driven mostly by increased coal cargoes. Ton mile demand growth is expected to reach 1.2% in 2022 and 2.1% in 2023, while projected annual fleet growth will not surpass 0.75% in 2023. The Chinese economy has undoubtedly slowed down in the first half of the year. But since the government has kept its annual GDP growth target intact, aggressive infrastructure stimulus will be required in the domestic market. In fact, the Chinese government has reiterated its support for the real estate sector several times this year by implementing many measures such as the issuance of special bonds for infrastructure and construction projects and the direct purchase of large unfinished housing developments. We expect these measures to help maintain steel production at high levels, which will support increased iron ore imports in the second half of the year. In addition, we’re experiencing increased demand for thermal coal for power generation. The ongoing conflict between Ukraine and Russia and the sanctions that have been imposed have led to an increased ton mile demand for coal mainly…

Thank you. The first question has come from the line of Tate Sullivan from Maxim Group. Pleas ask your question. Your line is open.

Hello, all. Thank you for taking my question. And Stamatis I figured I’d start with the market commentary that you ended your presentation with, particularly given the decline in Capesize rates today too. I mean, can you comment on – you did previously in previous quarters comment on coal cargoes in your fleet versus iron ore cargoes and how much could the resilient demand for coal offset the potential for weaker demand for iron ore in the second half of the year, please?

Well, hi, Tate, Good morning.

Good morning.

The thing here is that obviously, the Capesize rates have been quite disappointing. Nobody was expecting to see this kind of lows as we are experiencing today. That doesn’t change our view on how bullish we are for the sector, in respect of demand and supply. So the weird thing here is that you have both healthy roots with iron ore and very healthy voyages with coal as well. So apparently, demand appears to be quite strong. I think the market drop is mostly sentiment driven and the fact that the price of bunkers is trying to find a certain level. But I think overall, it has been affected by the massive sell-off that we saw in the FSAs, which affects the physical market as well, together with the fact that there has been some sort of an equilibrium at these levels, which, again, in our opinion, is not justified and that we expect to see the market rising again very, very soon. So it’s going to bottom out very soon, and we expect to see an upward trend moving into the second half of Q3. I think that the procurement of coal from Europe and other countries on the basis of the energy crisis is going to absorb more and more tonnage. We have seen a lot of unwinding of ships from delays in various ports due to mostly good weather globally. So with the first time of disruption, we expect to see the market turning back up very aggressively. That’s our take on the market.

Thank you, Stamatis. And you mentioned something about Vale as well. I mean, Vale slightly reduced their production guidance for this year earlier – a couple of weeks ago. But did you say they still, with that guidance, will have higher exports iron ore exports in the second half compared to the second half of ‘21, was that your comment?

Yes I think it’s slightly going to be higher. The overall exports from Brazil in the second half of the year, we estimate to be pretty much at the same levels like the second half of 2021. The thing here is that we have higher coal demand for the reasons that we all know, the Ukrainian – the Russian invasion of Ukraine and all that so – and the energy crisis. So we expect the market to turn higher in the very near future. So our take is that the market is going to recover very soon. I don’t know whether it’s going to be in the next few weeks or maybe in September, we don’t know, and I don’t want to take a position on that. But certainly, and surely, we expect to see the market recovering very soon.

Okay, thank you. And Stavros, did you mention in your prepared remarks and in the presentation, you have no balloon payments until ‘23. Did I hear that correctly?

Hi Dave, yes, that’s correct. No, we are addressing – we have addressed through the commitment letter that we received the last maturity, which is in December 2022 that of UniCredit. And then there is only one facility maturing at the end of next year, the sale and leaseback of the championship, which is based on the current dynamics on the fair market value of the ship and the projects outstanding of the facility, it will be a relatively comfortable exercise to refinance next year.

Okay. Thank you very much.

Thank you, Tate.

Thank you. We are going to proceed to the next question. Please standby. We have the next question coming from Poe Fratt from Alliance Global Partners. Please go ahead. Your line is open.

Yes. Good morning Stamatis. Good morning Stavros or good afternoon. Just a quick question on the table that you have for the third quarter forward cover, it implies that the fixed rate, the two of the Patriotship and the Hellasship are going to be fixed – were fixed for the entire quarter and that you don’t expect those to be re-delivered to you. Is that a fair assumption? And then what is your assumption for the fourth quarter on both of those because those rates are relatively high relative to the current spot market?

Yes, that’s correct. Both vessels are currently fixed on voyages that extend potentially to the end of the – or close to the end of the third quarter, Poe. So, if these vessels get delivered, it will be after the third quarter. Now, concerning the fourth quarter, it’s anybody’s guess whether this will be delivered. Mind you that both vessels scrubber-fitted and it’s developing into a 2 Tier market out there. So, scrubber-fitted ships are earning very decent premiums compared to non-scrubber. So, the rates might seem high compared to where the market stands now. But if you factor in also the scrubber premium, they are not that far away from where the market stands. So, all-in-all, I mean for the third quarter, if I were, I would include those vessels in my projections at the rate that we have them. And then in the fourth quarter, we will see whether we receive something from the charters on those.

Okay. Great. And then you have on the index-linked charters, you have 10 of those time charters with options to fix. And it looks like you fixed three of them for the full third quarter at a really healthy rate of close to $34,000 a day. Did you fix those beyond the third quarter into the fourth quarter or were those just exclusive to the third quarter?

Only one vessel extends until the end of the year, until December and the rate there is $31,500 per day. So, the other two ships that were fixed close to in excess of $38,000 were fixed up until the end of September.

Okay. Great. And then I am trying to figure out a cash walk to the third quarter potential cash level. And I just wanted to make sure that I am looking at things in the proper way. In July, after the quarter closed, you invested $10 million in the preferred in the spin-off. You also had debt that was assumed by the spin-off of about $5 million. And then you had the premier – you have potentially the Premiership and the Fellowship refi that will – that refi, if it closes in the third quarter, will hit the balance sheet, but then you will have the debt repayment in the fourth quarter. Is there anything else I am missing as far as just the financing aspect for the third quarter?

No, these are the – I mean the major liquidity events, I would say that are the ones that we mentioned.

Okay. And am I correct in assuming that the Premiership and Fellowship refi, there will be a timing issue as far as it will show – it will be done in the third quarter, but the debt won’t be repaid until the fourth quarter?

Most probably, the two ships will be refinanced by the end of the third quarter. So, whether it’s a third quarter event or an early fourth quarter event, it remains to be seen depending on the documentation procedure with the bank. But it’s potentially as I said, it’s going to be a third quarter event.

Okay. And then looking at the spin-off, you invested $10 million in the preferred, essentially had capitalized the spin-off initially and then helped raise some capital to complete an acquisition. That capital of $10 million is locked up for at least a year. What should we think?

Sorry, allow me to interrupt you. It’s not locked for a year period. I mean this capital it’s redeemable within three months from issuance. So, potentially, I mean if United so decides, they could return the capital within three months from issuance.

Okay. It would be interesting to see where they get that capital, but okay. So, that begs the question, what’s your additional appetite for helping the spin-off raise money as far as additional preferred? Have we seen the last of it? And then also, can you assure me that the management attention won’t be diluted on Seanergy that having another company – public company to run won’t dilute your efforts on Seanergy?

Hi Poe, this is Stamatis. Good morning from my side. First of all, I will ask – I will start with the last part of your question. There is absolutely no dilution effect. Seanergy and United has the proper management depth, especially Seanergy, as you know, has grown into something that we consider to be – I am not going to say mature, but it has come to a point where we have the proper management depth and the company goes on a very steady route and path. So, we don’t anticipate any disruptions there. As far as United is concerned, the company recently completed an equity offering. So, it has sufficient capital for the current acquisitions as well as other acquisitions. So, it will not require additional capital from Seanergy, and it’s likely that it’s going to return capital to Seanergy in the very near future. Going back to Seanergy, we might look into some fleet replacement options in the coming months, which means disposing of all their assets and buying newer assets. So, we reduced the average age. But this is not going to affect the distribution to our shareholders or anything like that, and we might be talking about one, two ships for replacement of all the tonnage and that’s about it. So, it’s going to continue in a very stable course of business operations.

Great. I didn’t – I was asking about the fleet renewal or fleet – potential fleet M&A, but that’s helpful. Last quarter, I asked what your optimal level is for the Capesize fleet and you pretty much, Stamatis said that, it was in the 20% range. Is that still the case? Is that sort of a target that we should be thinking about over the intermediate term?

Well, again, I don’t anticipate to see any further acquisitions in the immediate future. But like I said, I mean by the end of the year, we might be buying one more ship and disposing of an older ship, but that’s about it. I don’t anticipate anything super aggressive in respect of fleet renewal until the end of the year.

Great. Thank you for your time.

Thank you, Poe. Have a great day.

We have no further questions at this time. I will now hand the conference back to you for closing remarks.

Okay. Once again, I would like to thank everyone for attending our earnings call today. Thanks very much and looking forward to the next call sometime end of October, beginning of November for our Q3. So, thanks everyone for attending. And Razia, you may disconnect the call. Thank you.