Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Seanergy Maritime Holdings Corp (SHIP, Financial) reported a record net income of $14.1 million for Q2 2024, significantly higher than the same period last year.
- The company achieved a daily time charter equivalent of $26,600, outperforming the Baltic Capesize Index by 18%.
- Net revenues for Q2 2024 were $43.1 million, up from $28.3 million in Q2 2023, marking a substantial increase.
- Seanergy Maritime Holdings Corp (SHIP) revised its dividend policy, increasing the Q2 cash dividend to $0.25 per share, up from $0.15 per share in Q1 2024.
- The company completed $58.3 million in financing and refinancing transactions, maintaining a modest fleet loan-to-value ratio below 40%.
Negative Points
- Despite strong financial performance, the company faces potential market volatility and geopolitical risks that could impact future earnings.
- The Capesize market, while currently favorable, is subject to fluctuations that could affect Seanergy Maritime Holdings Corp (SHIP)'s profitability.
- The company's debt stood at $253 million at the end of Q2 2024, resulting in a debt capital ratio of approximately 50%.
- Seanergy Maritime Holdings Corp (SHIP) has a significant portion of its fleet fixed at current rates, which may limit its ability to capitalize on potential future rate increases.
- The company's ability to continue share buybacks is constrained by daily trading limits, potentially limiting this method of returning capital to shareholders.
Q & A Highlights
Q: I had a question on asset purchases. The last two Capes you bought well, that obviously keeps you pretty opportunistic and certainly worth more than when you bought them. How is the asset pipeline out there? Or can you see any possibility of being able to add any more vessels?
A: The answer is yes. There might be a couple more opportunities over the next three to six months. I'm not saying a five or 10 fix and trying to be conservative because again, our priority is to maximize shareholders' returns and of course, grow the fleet in a very conservative manner where at a very good pace right now between, let's say, 19 and 21 Capesize vessels and Newcastlemax is I believe that's a very good number for now and the important thing is to maximize the return on a per share basis. So I'm pretty confident that we will be able to source one, two, maybe three more ships over the course of the next three to six months. And I strongly believe that these opportunities will be very, very well priced compared to the current market levels. That's all I can say for now.
Q: Just to tie that discussion into your dividend payout now, it's a pretty clear-cut formula on operating cash flow, but I'm presuming that additional asset purchases are in the mix once you get past paying the dividend and servicing?
A: Well, I mean, we're trying to maintain, you know, the operating cash flow was you know the guiding principles to put it this way, and I'm quite confident that the equity required for the acquisition of the ships can be absorbed one way or another. So I don't think that, you know, unless which I doubt it will come across, let's say, opportunities of four, 10 ships if it's one two or maybe three ships over the course of the next three to six months. The equity component required for these acquisitions is not going to affect, you know, the dividend form.
Q: It seems like the equity market is very pleased by the new dividend policy. Can you share some more color on the threshold regarding the policy of how obviously you're paying you're going to pay a course chunky distributions going forward with close to 50% of free cash flow to equity. But sort of how do you look at that they compare to buybacks because you're still at quite a discount to intrinsic value?
A: That's a good question and thanks for that. We are looking into the buybacks. Of course, the only problem with the buybacks is that there is a certain limit up to how much stock we can, you know, proceed with buybacks because of the daily trading and you know, thresholds that we have. So dividend for us is the best way to return capital to the shareholders. And it's the more fair, transparent and straightforward, to be honest. So we will continue on a dividend course, if you want to have a guidance, a good guidance for future dividends. I believe that the Q2 dividend formula is a very good guidance, and I don't see that changing materially over the course of the next quarters unless something super major happens. You know, something since mid-quarter, you know, adverse change or something like that. So on a normal course of business. I would expect the Q to be a good guidance for your future reference if that makes sense.
Q: In terms of the market could you share some color on sort of short term rate expectations as we are soon approaching sort of the seasonal high and what's going to drive?
A: Well, that's a great question and thanks for asking that. And despite the overall negative noise that we hear in the market and all this negativity coming across from sell-offs here and there, the fundamentals for the drybulk market and especially for the Capesizes, have not really changed at all over the course of the last two to three months, for example, the guidance from the big miners for the second half are all higher than the first half. So if we believe that the guidance from Vale, Rio Tinto and BHP is accurate, they will be exporting 5% to 7% more cargoes in the second half of the year, which I believe is very, very good news. The inventories of China have started after, you know, quite some time sort of a buildup to start reducing and which is, of course, very good news, as you know, for demand for iron ore in the stockpiles in China. And as far as supply is concerned, nothing has really changed. I mean there has not been any material new-building Capesize deliveries. On the contrary, the global Capesize fleet is getting older and older by the day, the Red Sea is still closed, so the coal demand is still quite strong. Aluminum and bauxite demand is still quite strong. So I don't really see the fundamentals changing as you say in the short term, from the contrary, I believe that the market may have bottomed or may be bottoming and we may see a price sorry, an uptick in the market over the next the course of the next few weeks. Again, a very, very careful estimate.
Q: On the group out on interest rates going forward to the market liquid enough? Is it a six-month forward market or can you start to look in some rates for 2020?
A: Yes, good morning, Dave, and thanks for listening into our call. And we believe that the market of the face is quite liquid. So right now, we're very, very well hedged for the second half of the year, about close to 40% of our fleet is covered that term what we believe to be very strong rates, if we see a mix in the next few weeks or the months going forward, we will, of course, be no push the trigger and fix more ships at this high rate. So there is plenty of liquidity. If we want to do that for the time being, we're just waiting still. And if the opportunity comes across, we're just going to take it. And then I was looking at your press release, the charter lift for your fleet in this current credit market with a good outlook to most the chart usually and the existing charter existing contracts with the current charters, are there will there be some turnover PATROL generally with them to extend with attempt?
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
