Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Holdings Corp. Conference Call on the Third Quarter Ended September 30, 2023 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and CEO; and Mr. Stavros Gyftakis, Chief Financial Officer of Seanergy Maritime Holdings Corp. [Operator Instructions] Please be advised that this conference call is being recorded today, Tuesday, November 14, 2023. The archived webcast of the conference call will soon be made available on the Seanergy website, www.seanergymaritime.com. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can use the actual results to differ materially from those in the forward-looking statements is contained in the third quarter ended September 30, 2023 earnings release, which is available on the Seanergy website again, www.seanergymaritime.com. 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 third quarter and first 9 months of '23, while also announcing the distribution of another cash dividend. Starting with our commercial performance, I'm pleased to report that in the third quarter, Seanergy achieved a daily time charter equivalent rate of $15,300, once again, overperforming the Baltic Capesize Index by around 14%. This is a result of our strategic investment in improving the energy efficiency of our fleet, where the majority of our ships is obtaining premiums over the index as well as our effective hedging strategy where we locked in about 30% of our fleet in fixed rates exceeding $20,000 a day. Considering the performance of the Capesize market, despite the strong demand for seaborne transportation of iron ore, coal and bauxite in the first 9 months of the year, congestion stood at historical low levels. Therefore, vessel utilization improved, expanding the effective fleet supply, which in turn has put severe pressure on the spot market. As congestion found bottom in July and August, the increased cargo flows resulted in significant supply tightness, which led to a recovery in day rates to levels exceeding $30,000 per day in October. Having entered the fourth quarter with 70% of our days taking advantage of the higher market, we're well positioned to benefit from the recent recovery of our sector. Notwithstanding the overall weak Cape market conditions, which impacted our financial results for the quarter, our cash reserves remain at satisfactory levels. On that basis, our Board of Directors has approved another consistent quarterly cash dividend of $0.025 per share. Regarding fleet developments on October 24, we took delivery of our first Newcastlemax vessel, which was renamed Titanship. That vessel…

Thank you, Stamatis, and welcome, everyone, to our third earnings call for 2023. Let us start by reviewing the main highlights of our financial statements. Our net revenue in the third quarter amounted to $24.5 million, while in the 9-month period, it reached $70.8 million, definitely a drop compared to the expected figures of 2022 as the freight market during the quarter remains subdued. However, we are pleased that we have outperformed the market in terms of time charter equivalent, as Stamatis mentioned before, highlighting Seanergy's versatility in all market conditions. Meanwhile, our adjusted EBITDA was $9.5 million in the quarter and $29.1 million in the 9-month period. Finally, we recorded a net loss of $5 million in the third quarter, expanding the net loss for the 9-month period to $8.5 million. It is essential to consider the inflationary conditions under which we currently operate as they have had an impact on our overall cost. At the same time, the advantage we generally gain from vessels equipped with scrubbers was reduced in the third quarter because of the temporarily narrowing gap between high and low fuel prices. We are optimistic that our freight hedging strategy, along with the already observed improvement in spot rates in the recent months and the widening fuel spread along with improved profit-sharing scheme on some of our vessels, should result in improved financial performance in the current quarter. Moving on to our balance sheet. Our cash position remained practically unchanged at $22 million. This allowed us to continue returning capital to our shareholders by maintaining the regular dividend distributions. Now on the debt front, aggregate balances dropped to $223 million, with our market value adjusted loan-to-value ratio remaining at 52% despite the correction in vessel volumes. We consider such debt levels to be sustainable. While…

Thank you, Stavros. Since the beginning of 2023, a significant increase has transpired in Capesize demand as tonne miles relating to iron ore, coal and bauxite have increased substantially by up to 8%. In comparison, the size of Capesize fleet has increased by approximately 2%, which clearly highlights the favorable fundamentals in the dry bulk market. Despite the healthy nominal supply and demand balance, the trade market did not respond as positively as initially anticipated. Quite the opposite, actually. The main reason was the increased efficiency of the Capesize fleet and a significant decrease in congestion, which in turn added considerably to the effective supply of available vessels. Additionally, as highlighted in our previous earnings updates in August, we've also observed an increase in deadweight adjusted vessel speed, resulting mainly from the operating vessels of the large ore carriers. This, we believe, is contradicting the emphasis placed on the reduction of the industry's carbon footprint. Going back to the reduced congestion matter. During the first 9 months of the year, the levels of port congestion fell to historical lows and reached a multiyear bottom in the summer months. Since the end of August, the reversal of this trend has reduced availability of vessels with congestion starting to return closer to long-term averages. As a result, Capesize charter rates stayed an impressive recovery since the lows of the third quarter, rising to levels exceeding $30,000 a day in October from rates as low as $8,000 a day recorded earlier in the summer. Looking ahead, we remain positive about the prospects of a dry bulk market based on the lowest newbuilding order book of recent decades and limited shipyard availability. Capesize fleet growth is expected to be lower than 1% in each of the 2 years -- the next 2 years, suggesting…

[Operator Instructions] We will now take the first question from the line of Tate Sullivan from Maxim Group.

Can you talk, Stamatis, are you built related to the fees from related parties and the increase in general and administration expenses? I think you've mentioned before, you're building your own ship management business. Is that part of the reason for the higher general and administration expenses? And should that continue going forward too?

Yes, Tate. I hope all is well. Nice to hear from you. Well, we actually have increased G&As, but at the same time, we're compensating about $600 per ship per day from United. So yes, G&As are a little bit up, but we compensate that to a large degree from the fees associated with United Maritime.

And do you have a ship management business? And could you start to manage ships other fleets? Or is that -- or am I incorrect?

Of course, of course, yes. I mean, right now, the vast majority of the fleet under our ownership is under the Seanergy ship management. So the answer is yes, we consider ourselves a very premium provider of ship technical management and commercial management services. So the answer is, yes, we can do other companies, but now we're focusing to Seanergy and United. We do maintain a few vessels independent third-parties for benchmarking regions. So we still maintain one or two companies, and we have relationships with most of the independent third-parties out there for exchange of information and knowledge and all that, but the vast majority of almost everything is under our roof.

And then on any scheduled, I mean you have a newer fleet of Capesize, mostly scrubbers, is there any scheduled downtime for 2024 for modeling purposes?

Well, we have about 3, 4 ships next year that will enter the dry docks. We don't consider any important or any particular difficult downtime altogether. I must say, around 15 to 20 days ship. So it's very, very minimal to the total operating days of the company.

Okay. And then have you seen any -- in the older fleet of Capesize, any indications recently of scrapping or not at all?

Well, the oldest fleet vessel on our fleet is 2009. So it's still considered, let's say, middle age. It's not considered older. And it still operates very successfully and in very competitive terms with the rest of the fleet. So we don't really feel any pressure whatsoever. Right now, the market has opened a lot in various commodities that not necessarily require age limits. So we're very much comfortable in the age bracket of our fleet. But most importantly, I must remind everyone that there are no newbuilding. Order book is very limited. It's the lowest order book of the last 20, 25 years. So we're going to have to leave with the ships that the current global fleet has right now. So eventually, everything is going to get a bit older in the next few years.

And outside of your fleet, no recent trend in scrapping? I have not seen any, but...

Correct. Yes. Yes. We don't see any material trends in scrapping. However, we believe that from next year onwards 2024, that the total combination of the environmental regulations is going to be hitting the market that many ships will not be able to compete with the rest of the fleet. So regardless of age, there are certain yards in the past that have not managed to make ships that will fit the environmental profile of the fleet of tomorrow, let's say, the positive way, even though it's still the same vessels. And those ships will need to be either significantly upgraded or they would have to exit the trade.

And Stavros, one last one for me. On the -- you mentioned higher interest cost, interest expense in '24. Can you give us a rough approximation of where your current floating rates are today?

Look, in total, the refinancings that we have done have resulted in our margin, while we pay above the base rate to be in the region of 2.5% to 3%. So nowadays, [SFR] is around 4.5% to 5%. So the all-in cost is around 7% to 7.5%. So in terms of projections, going forward, we expect the interest rate -- quarterly interest rate expense to be -- the cost expense to be around $5 million. And then going into 2024, since the loans are amortizing pretty steeply so the outstanding balance will be decreasing. We will go down to $4.9 million, $4.8 million and so on. In terms of breakeven, I would say that you should have in mind around $2,800 per vessel per day in our cost breakeven attributed to interest.

We will now take the next question. It's from the line of Kristoffer Barth Skeie from Arctic Securities.

Congrats on quarter and obviously, good guiding. Can you please elaborate a bit on the bauxite trade and how it will affect the Capesize market and seasonality. There's a lot of talk in the market about this now and I mean, typically, first quarter has been the weakest one, but do you see any structural change here over the coming years?

Well, yes, most importantly is the fact that from 2024 onwards, we will see the acceleration of all the new environmental regulations that so far, they have been in place, some of them, but they have not really been in for. So 2024 is going to be the first recording year of all the new environmental regulations. So the EEXI will kick in full-fledged, CII as well. But most importantly, and what will have the first monetary impact for the owners is the EU ETS. And we still have a lot of discharging in EU, so that's going to be the first real pain emissions related. So as I mentioned to Tate before, we strongly believe that many ships would rather have to slow down significantly or will have to be upgraded considerably in order to be competitive for the next few years. We have seen a massive increase in demand arising from China and other places year and year anywhere between 5% and 9%. So the volumes are tremendous. If the supply -- the effective supply of vessels is a little bit more moderate because of speed, congestion and other reasons, I believe we can see very big spikes in the market starting in 2024, and that's only going to get better for us going forward, much better.

Okay. So going back to this bauxite trade out of West Africa. Is this something you've seen increase lately? And how much are you involved in this trade?

Okay. I get it. Yes, Guinea is increasing a lot, and we're going to have the Simandou which is iron ore also arising from West Africa. Yes, volumes are picking up a lot. I don't want to focus only in bauxite because that by itself is a big growing trend by itself. But the overall demand -- to make demand for raw materials like iron ore, coal and of course, bauxite, it appears to be continuing progressively in the next few years. So yes, bauxite is significantly up, but it doesn't really compare on an absolute basis to iron ore and coal cargoes. The increase we've seen in millions of tons over the last year, year-on-year.

We will now take the next question from the line of Michael Heim from NOBLE Capital Markets.

I do not see any mention of any share buybacks during the quarter and the shares have been a little bit weak since the quarter has ended. Do ever you feel that you have the balance sheet and the cash flow to make repurchases if the opportunities arise? And how do you prioritize share repurchase versus paying down debt?

That's a great question, and thank you for asking this. The answer is that we do prioritize on a number of things right now, but most importantly, is the cash flow of the company. We still have a dividend in place, which we intend to continue for the foreseeable future. So right now in respect of giving back money to our investors, I think that's been a priority that we want to continue. Year-to-date, the Capesize market has had the worst period of the last 5, 6 years. So in the beginning of 2023, we're anticipating a much better freight rate environment. Unfortunately, it didn't meet our expectations. It was far below our expectations. So we decided to maintain cash flow as much as we can in order to sustain a good cash and healthy balance. The only upcoming buyback that we have until the end of the year is a $3 million small outstanding convertible that we're going to repurchase and that's it. And I think that is a significant repurchase by itself. And so far this year, we've done quite a few repurchases and I've done purchases from the open market myself. So altogether, it's maintenance of cash. We believe 2024 is going to be a better year, but since we were a bit disappointed in 2023, we prefer to have a good cash maintenance. And of course, the principal repayment of debt, as Stavros mentioned before, is quite steep. So we want to have the proper cash flow in place to deal with all the cash flows that we need to deal with in the next few months.

There are no further questions at this time. I would now like to turn the conference back to Mr. Stamatis Tsantanis for closing remarks.

Dear all, thank you very much for attending our call today. We look forward to catching up again in the next few weeks and months with other corporate developments. In the meantime, once again, thanks for attending our call. And thank you. You may disconnect now.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.