Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Holdings Corp. Conference Call on the Fourth Quarter and Year Ended 31 December, 2022 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and CEO; and Mr. Stavros Gyftakis, Chief Financial Officer of Seanergy Maritime Holdings Corp. At this time, all participants are in listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded today, Tuesday, March 14, 2022. The archived webcast of the conference call accompanying slides will be soon made available on the Seanergy website, www.seanergymaritime.com. 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 those 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 fourth quarter and year ended December 31, 2022 earnings release, which is available on the Seanergy website, again. I would now like to turn the conference over to one of your speakers today, the Chairman and CEO of the company, Mr. Stamatis Tsantanis. Please go ahead, sir.

Thank you, operator. Hello. I would like to welcome everyone to our conference call. Today, we are presenting the financial results for the fourth quarter and the full year period of 2022. We are also pleased to announce the distribution of another cash dividend, which is basically equal to our net profit for the fourth quarter. The fourth quarter was another profitable period for Seanergy and concluded our second consecutive profitable year. First and foremost, in 2022, we clearly prioritize shareholder rewards, as I will discuss in detail in today's call. We made generous distributions to our shareholders despite a series of macroeconomic and political challenges that occurred during the year. First, there was the invasion of Ukraine by Russia and the ongoing military conflict. Second, the heightened uncertainty about the probability of a significant slowdown in the global economy due to the spike in inflation. Last but not least, 2022 marked the third consecutive year of severe lockdowns in China, which negatively affected industrial production and economic growth. However, the recent lifting of COVID-related lockdowns in China has already had a positive effect on general economic activity and steel production, and we expect to see accelerated raw material imports. We are bullish for the dry bulk market outlook, and we believe that Seanergy is very well-positioned to benefit over the next few years. Turning to our highlights. With regards to our financial performance, for the full year period, net revenue reached $125 million, adjusted EBITDA was $65.6 million, while net income amounted to $17.2 million. As regards to fourth quarter, we recorded net revenues of $28.5 million and adjusted EBITDA of $12.5 million, while net income was equal to $0.5 million. Since the fourth quarter of 2021, we delivered approximately $58.4 million of value to our shareholders in the…

Thank you, Stamatis. Welcome, everyone, to our earnings call. Let us start by reviewing the main highlights of our financial statements for the fourth quarter and 12 months period that ended on December 31st, 2022. In the fourth quarter, we achieved net revenue of $28.5 million, reflecting increase from the net revenue of $56.7 million in the same period of 2021. The reduction in our revenue came as a result of the decline in the average daily time charter equivalent of fleet, which was mainly due to the increased volatility in spot earnings and the softer overall market conditions. Our adjusted EBITDA and net income stood at $12.5 million and $0.5 million, respectively. However, we remain profitable amid these unfavorable market conditions. And in fact, we were able to outpace the market as this is reflected in the Baltic Capesize Index. For the 12-month period, net revenue was $125 million with our average daily time charter equivalent rate standing at $20,040 compared to net revenue of $153 million, and an average daily time charter equivalent rate of $27,400 last year. Net income for the 12-month period was $17.2 million, while adjusted EBITDA reached $65.6 million. Earnings per share for the quarter and 12-month period were $0.03 and $0.97 respectively. Concerning our balance sheet, our cash at the end of the fourth quarter remained robust and stood at $32.5 million, in a year with approximately $28 million in dividend distributions and buybacks. At the same time, our assets sold to $514 million, while our debt also increased but remained at modest levels as it is reflected in our debt ratio of approximately 51%. Our net debt at the end of the year was $227.4 million. Finally, total shareholders' equity was $222 million as of December 31, 2022, from $245 million at…

Thank you, Stavros. Let's now elaborate on the Capesize demand and supply fundamentals. In 2022, the Capsize market started off with a strong first half and ended on a weaker Q3 and Q4, diverging from the usual historical pattern. As discussed at the beginning of this call, the global picture was negatively affected by the invasion of Ukraine by Russia and the ongoing military contract. In addition, rising inflation had a negative impact on the global economy by increasing the uncertainty in industrial input costs. Lastly, 2022 was the third consecutive year of lockdowns in China, which resulted in a negative economic backdrop, punctuated by fully industrial production and economic growth. The average level of the Baltic Capesize Index for the year 2022 was approximately 16,200, with a first half average of 18,200 and the second half average of 14,300. We're pleased to see the market achieve these levels amidst slower industrial activity, and we are confident of further improvements as conditions normalize. Let's discuss now the high level demand and supply picture for 2023 and onwards. In terms of vessel demand during 2022, China's industrial production fell, due to squeeze profit margins and weaker real estate activity. The manufacturing purchasing managers' index fell to its lowest level since the COVID lockdowns and to the second lowest level since 2010. So far in 2023, we have seen a reversal of these negative trends, as the latest two months manufacturing PMI in China registered the highest increases of the past 10 years. Other forward-looking indicators, such as excavator sales, which have historically been good predictors of future construction activity have also turned upwards, while profit margins and utilization for steel mills are rebounding strongly and Brazilian iron ore exports are finally back on track for a better performance. This supported both…

[Operator Instructions] And the first question from Tate Sullivan from Maxim Group. Please go ahead.

Hello. Thank you. Good day Stamatis and Stavros. Stamatis, you commented on supporting good shareholder returns through the cycles and I think, correct me if I'm wrong, I think you'll have a gain on the sale of about $8 million in this current quarter from selling two vessels. I mean how do you consider that gain when you evaluate your quarterly dividend since it is a one-time? And just another way what the dividend amount that you announced today as well please?

Hi Tate, good morning and thanks for the question. Well, obviously, yes, we're going to have a gain from the sale of the ships. At the same time, Q1 so far has been trading at around $10,000 a day. So, we have to see what's going to be the final impact from that at the end of the quarter and then we will decide. But it's not going to be a static approach if obviously, the market has turned to where we wanted to go and where it appears that it is going. Then obviously we will try and reward our shareholders more generously to put it this way. Right now, the reduction of the dividend has been in order to reflect the very bad market that we experienced in Q1 or we are experiencing so far. And we're trying to preserve cash and liquidity as much as we can. Obviously, as things change in the future and as things improve, we have had an excellent track record in paying out to our shareholders to the best of our capacity.

Thank you. Yes. And you mentioned the repurchases -- and I mean the China PMI reading a couple of weeks ago was the highest what 2012, but then -- I mean, since that PMI reading, have you seen or even before that, China booking more voyages? Are there any other tangible data points that you can point to in terms of China demand for the dry bulk sector, please?

Demand is not only China-driven. I mean we keep saying China and China, but I think China contributed more to the negative market of 2022. And we believe it's going to contribute a lot in the upside. But have in mind that China and the PMI was so weak in 2022 because they had the third consecutive year of almost a full year lockdown. As you can understand, this had a severe impact in industrial production, things start to turn very [indiscernible]. At the same time, it's not only the vast infrastructure projects that we expect to happen in the Far East area. We also see that there's going to be $1.5 trillion of new infrastructure investments in the UAE area, together with Saudi Arabia that have already started. So, this is going to absorb a lot of steel and a lot of iron ore and coking coal demand in our opinion. So, overall, we feel that the market is getting into a very strong infrastructure phase. Combined with the Chinese reopening of the economy, I believe that from a demand perspective, we will see much, much better numbers than compared to last year.

Thank you. And Stavros further, I'm looking at the numbers, but can you remind me the fees from related parties. Is that related to United Maritime or some gain on bunker fuel, or is the gain on bunker fuel within the lower operating expenses?

No, this is a -- hi Tate. As you very correctly pointed out, these are fees and income from United. So, basically, as you may recall, United is managing the operations of Seanergy, so Seanergy is getting an administrative fee out of United. And at the same time, the dry bulk vessels of United are being managed by Seanergy’s in-house dry bulk management company. Lastly, Seanergy is also earning fees on the earnings of United ships and on the sale and purchase activity of United. This should be seen in conjunction with a small increase that we had in our G&A. The income from United is there to set of the increase, which has incurred as a result of Seanergy basically managing United's operations.

Thank you very much.

Thank you, Tate.

Thank you for your question. We are now taking the next question. Please standby. The next question comes from J Mintzmyer. Please go ahead. Your line is open.

Hi, good afternoon gentlemen. Thanks for taking my question.

Hello, J. Nice to hear from you.

Yeah. The first question I had, I'm looking at your results, and it's been 2.5 months in the year, you had the convertible repurchase, you had two ships that you sold. I'm wondering if you have a pro forma figure for liquidity, how much cash liquidity you have right now?

Right now, we are -- if I recall well, in the mid-20s, $20 million. But please have in mind that we have a certain refinancings lined up now, which are to the benefit, of course, of the overall capital structure. So this figure is going to change depending on what's going to be the final agreement on that. But that's a good region. I mean, anywhere between, let's say, $25 million and $30-plus million, if I remember well.

Thank you. Yeah, I was wondering on the convertible repurchase. I thought that was very accretive, good job on that, but you left about $3 million of those outstanding. What was the thought process behind that? And is there a potential to wrap-up the rest of those?

Yeah. So there was absolutely no reason. It was just the way we wanted to get on with the housekeeping effect of whatever that was on the basis of the agreement. And we expect that to close completely, hopefully, within the first half of the year. So in the next few months, we will most likely extinguish the whole thing.

Sounds good. Looking forward to that one. I know last time we talked a little bit back in January, the goal was to maintain a fixed dividend level, which, of course, would have been $0.25 a share. I see you cut the dividend by 90% today. Can you talk a little bit about the -- what changed your mind there in February and March? Is it just the week rates, or is there something else going on?

Well, we are still fully committed in providing very general shareholder returns. As I explained to Tate before, we wanted to preserve liquidity. We saw the market going down to $2,000 a day. As you understand, I mean, a couple of weeks ago, the market was literally at $2,000 a day. And we wanted to maintain as much cash as possible, not to have any liquidity concerns. But if there's the right opportunity or if there's anything in the horizon, we might need to move. The question is that we're fully committed in providing shareholder returns, and we will get back to certain levels that we feel will be more than adequate in the near future. We just wanted the market sentiment to get back to some positive levels. When -- again, the market is at $2,000 a day that made us a little bit nervous in paying out a whole dividend amount. So we just wanted to be cautious about it.

Right. Yeah, those rates were very steady in February. Of course, right now, they're looking a lot better. I know you have higher cash breakeven levels, but you must be pretty close to turning cash flow positive. You mentioned your liquidity is about $25 million to $30 million. Is there sort of a reasonable minimum that you would like to maintain? I'm just curious because you have such a great opportunity to repurchase shares, you can buy back those convertibles I'm just wondering what kind of buffer you have at this moment?

Well, we're generally very comfortable if we can maintain, let's say, at a minimum of 1.5 million per ship. I mean this is what we have in mind to be absolutely. But again, this is not a static approach, if we see the market and the outlook being very positive and we're able to secure cash flow by converting floating to fixed, as we have already started doing already, then we will be even more in our payout, we'll be more generation or payout. If the market outlook, I mean, for example, we come to a point where we see Q1 next year pricing at $3,000 or $5,000 a day, we might be a little bit more cautious. But overall, we feel that market is now turning into a more sustainable level, and we will be able to again start maximizing our shareholder returns to the extent possible. Also, as a final point I want to make is that my strong commitment in the company will be fully, fully applied in the near future by me making purchases in the open market. So I'm fully committed in what I've said, and I will continue doing so, as I have done all the way up and down and most of it down to be honest.

Yes. Looking forward to the stronger rates and strong returns. Final question. Thank you so much for your time this morning. You talked about the related party fees with managing the United Maritime's fleet. You mentioned there's some sales and purchase stuff in there as well. United Maritime had a massive gain on sale with some of the tankers there. Is there going to be any proceeds from that going to Seanergy, or are those only on the new vessels?

Well, no. I mean, United proceeds are United proceeds. So there's no profit selling in whatever we do. However, the company is making 1% on the sales proceeds and when you make such a big profit from the sales of United ships, then that is reflected on the commission that Seanergy is making on the sale of the vessels. So that's as far as it goes. But other than that, there's no other profit saving agreement. The two companies are separate, and the shareholders in both cases have been very generously rewarded for 2022.

Excellent. And I'm looking forward to more details in the filings. Thank you both for your time today.

Of course, J, nice to hear from you. Thank you.

Thank you for your question. We are now taking the next question. So please standby. The next question is from Tate Sullivan from Maxim Group. Please go ahead.

Thank you for taking the follow-up. Stavros, circling back on the vessel operating expenses per day, they did drop 7% year-over-year and drop quarter-over-quarter as well. Is that -- is some of the 6,651 in 4Q from bunker fuel gains? And what's a reasonable run rate going forward, the daily OpEx please?

Thanks, Tate. No bunkers are not coming to the OpEx calculation. So OpEx, consents only operating expenses, no voyage expenses. So that's mainly crew expenses, the majority of -- around 60% of the operating expenses has to do with crew, then you got spares and supplies. And then you have also insurance. The increase in the OpEx can be basically apportioned mainly on the inflationary environment and the fact that stores and supplies have gone up. At the same time, forwarding cost due to COVID has also increased. And also crew expenses have generally and especially repatriation, traveling expenses and accommodation have increased a lot. And also, please bear in mind that we have expanded the fleet load. We have acquired many new ships and basically in order to crew these vessels and have the quality of the crew that Seanergy wants on its ships, we have been paying top dollars for our crews. That's the reason behind the increase in OpEx.

Thank you. And then on the refinancing, seems very active. Is it securing new relationships or establishing new relationships with lenders and also increasing the floating rate during a rising interest rate environment for the refinance, can you talk a little bit more about --

Refinancing the one that we announced now that concerns the Championship, this will be refinanced through one of our existing lenders, Danish Ship Finance. The reason behind these refinancings were mainly commercial. This vessel was financed through a sale and leaseback agreement with Cargill whereby the charter had the biggest profit share, the biggest share of the profit from the scrubber and there was a small discount versus the Index due to the financing background of this agreement. Now we are refinancing the ships through a third-party lender and the commercial arrangement would be more beneficial for the company. We include a premium to the Index and the majority of the scrubber profit sharing will be on the account of Seanergy. Next refinancings that we have lined up are mainly aimed at expanding our relationships with the Japanese lenders. We have -- which are very competitive, both on their overall terms and on their pricing.

Thank you very much. Have a great rest of the day.

Thanks, Tate.

Thank you for your question. We are now taking the next question. Please, stand by. The next question from Kristoffer Skeie from Arctic. Please, go ahead.

Hello, gentlemen, congrats on the quarter.

Hello. Good morning, good afternoon. Nice to hear from you.

Good, good. Likewise, good afternoon. So I understand the rationale behind the dividend reduction for the cost. So it makes perfect sense given how the market has been. But as you pointed out, I mean, the supply side, it looks fantastic going forward into 2024. So the outlook is definitely strong and in connection with that, I was looking, sort of, how are you considering capital allocation going forward in terms of acquiring vessels versus the share buybacks or dividends?

That's a great question. I think we will be fully in line and consistent with what we did in 2022. In 2022, we sold three of our older ships, and we bought two more modern ships. So the net cash effect has been minimal for the company, if you think about it. So we will likely do the same, maintain pretty much the same number of ships. If we can renew the fleet by selling an older ship and buying more modern, we will most likely do it. At the same time, we were super generous in our distribution in 2022. I must remind you that, we paid out approximately $1.28 in today's value, which is more than 20%-plus dividend yield. And if you count in the value of the distributions from United, that's another $0.30. So it has been a very, very general distribution. We did in 2022. So we will continue to have a balanced approach in our capital allocation in 2023. We're going to keep cash for a potential fleet renewal. But our priority remains in generating and paying good shareholder returns. Another point I must say here, we have provided a sensitivity analysis on the EBITDA in today's call. And as you can see, with a very modest $20,000 BCI time charter, the company is going to make $75 million of EBITDA. So we're talking about the massive potential cash flow generating capacity. And if we move up to, let's say, 2021 figures, and we're talking something in the region of 100 plus, $110 million of EBITDA, please rest assure that our shareholders will have a very, very generous distribution, if we come to these figures.

Okay. Thanks a lot. Have a great day.

Thank you. Have a great afternoon.

Thank you for your question. [Operator Instructions] There are no further questions. I will hand back the conference for closing remarks.

Thank you very much for attending today's call. And please stand by in the next few weeks for providing additional information about the company's capital structure and business development. So, thank you very much for hearing into our call today, and have a great day afternoon. Thank you.

That concludes the conference for today. Thank you for participating. You may all disconnect.