Seanergy Maritime Q3 & Nine Month Report

Thursday, November 18, 2010

Seanergy Maritime Holdings Corp. (NASDAQ: SHIP; SHIP.W) announced its operating results for the third quarter and nine months ended September 30, 2010.

Dale Ploughman, the company’s Chief Executive Officer, stated: “The third quarter of 2010 was another important quarter in our development as we completed successfully the acquisition of the remaining 49% ownership interest in Maritime Capital Shipping Limited (“MCS”). In addition, on October 22, 2010 we completed the acquisition of the remaining 50% ownership interest in Bulk Energy Transport (Holdings) Limited (“BET”) and, as a result, we now own 100% of MCS and BET and their fleets. These transactions increased the size of our wholly owned fleet to 20 vessels, and we believe these transactions significantly improved our income generating capabilities and simplified our balance sheet.

Consistent with our strategy of seeking profitable long term employment for our vessels, during the third quarter we secured new time charters for four of our vessels. We believe that these new time charters are with highly reputable charterers at attractive charter hire rates. Three of these time charters have profit sharing arrangements.  Our time charter coverage is among the highest in the industry, which we believe provides cash flow stability and protection against the volatile freight rate environment coupled with upside potential, as five of our vessels in total are under profit sharing arrangements that allow us to participate in market upswings.

We continue to have discussions with our charterers about the vessels that are scheduled to be redelivered to us following the expiration of their contracts.  Consistent with our strategy, we seek to re-employ these vessels at profitable rates.

We believe that dry bulk fundamentals remain stable as we expect demand for core commodities, namely iron ore and coal, to remain strong from China and India. Industry sources project that over the next 10 years, China’s GDP will continue growing at 7% per year on average, while over the next two years India’s GDP is expected to grow at an annual rate of 9%. Industry sources further indicate that a catalyst for the dry bulk industry in the fourth quarter 2010 is expected to be China’s inventory buildup of iron ore and coal ahead of winter.

Although the risk of oversupply is still a factor in the dry bulk market, the rate of actual deliveries remains unclear. Industry sources remain skeptical concerning the ability of Greenfield shipyards that have never built vessels before, to deliver vessels ordered, while at the same time vessel deliveries in 2011 reflect orders that were contracted at prices significantly above current market levels. In addition, the capital needed to finance the completion of these newbuildings remains a concern for many companies. We expect to benefit from the fact that there have been fewer deliveries of smaller types of vessels, such as the Handysize, which constitute a significant portion of our fleet, as this should make this segment more attractive for the owners.

Our focus on accretive growth will remain a primary goal as we continue seeking attractive investments that can enhance shareholder value for the longer term.”

Christina Anagnostara, the company’s Chief Financial Officer, stated: “As of September 30, 2010, our total assets were $713.9 million and our total debt was $409.9 million. As of September 30, 2010, our cash reserves were $76.3 million, reflecting $26.3 million in cash generated from operations. We believe that our significant cash position and cash flow visibility enable us to meet remaining debt repayments and anticipated capital expenditures in 2010.

The company now operates and owns a fleet of 20 vessels with secured period employment of 98% for 2010, 78% for 2011, 38% for 2012 and 19% for 2013, which in our opinion provides us with financial visibility with upside potential.”

Third Quarter 2010 Financial Results
Net Revenues for the third quarter of 2010 increased to $29.0 million from $22.4 million in the same quarter in 2009.

The company operated a fleet of 20 vessels on average during the third quarter of 2010, earning a time charter equivalent (TCE) rate of $16,153 as compared to an average of 8.7 vessels and TCE rate of $30,052 during the third quarter of 2009. The decreased TCE results from lower market imposed time charter rates earned by our vessels whose original charters expired during the third quarter of 2009.

For the three months ended September 30, 2010, our vessel operating expenses increased to $8.1 million from $3.9 million in the same quarter of 2009 due to the increase of our fleet.

EBITDA was $15.7 million for the third quarter of 2010 as compared to $21.6 million in the same quarter in 2009 due to lower income received during the period. Adjusted EBITDA, which excludes losses on interest rate swap agreements, was $17.2 million for the third quarter of 2010.

Operating income amounted to $8.2 million for the three months ended September 30, 2010, as compared to an operating income of $17.4 million for the same quarter in 2009 due to higher operating expenses and depreciation from the addition of vessels to our fleet.

Net Income was $2.9 million, or $0.03 per basic and diluted share for the three months ended September 30, 2010, as compared to Net Income of $14.0 million, or $0.57 per basic and $0.46 per diluted share, for the same quarter in 2009, based on weighted average common shares outstanding of 109,723,980 basic and diluted for 2010, 24,580,378, basic, and 30,386,931 diluted, for 2009.

The decrease in Net Income is primarily the result of a 46% decrease in TCE to $16,153 per day for the three months ended September 30, 2010 as compared to $30,052 per day in the prior period as well as a $1.5 million increase in interest expense from $2.1 million to $3.6 million in the respective period.

Nine Months 2010 Financial Results
Net Revenues for the nine months ended September 30, 2010 were $69.9 million as compared to $70.7 million in the same period in 2009. The decrease in revenues is mainly attributable to lower TCE rates earned by our vessels. The decreased TCE results from lower market imposed time charter rates earned by our vessels whose original charters expired during the third quarter of 2009.

The company operated a fleet of 15.4 vessels on average during the first nine months of 2010, earning a TCE rate of $17,039 as compared to an average of 6.9 vessels and TCE rate of $42,127 during the same period of 2009. For the nine months ended September 30, 2010, our vessel operating expenses increased to $20.2 million from $9.8 million in the same period of 2009 due to the increase of our fleet.

EBITDA was $36.5 million for the first nine months of 2010 as compared to $59.2 million in the same period in 2009 due to lower income received during the period and loss on interest rate swap agreements. Adjusted EBITDA, which excludes loss on interest rate swap agreements, was $40.9 million for the first nine months of 2010.

Operating Income amounted to $17.4 million for the nine months ended September 30, 2010, as compared to an Operating Income of $39.6 million for the same period in 2009.

Net Income was $2.8 million, or $0.03 per basic and diluted share for the period ended September 30, 2010, as compared to Net Income of $33.3 million, or $1.44 per basic and $1.13 per diluted share, for the same period in 2009, based on weighted average common shares outstanding of 80,568,056 basic and diluted for 2010 and 23,109,073, and 29,420,518 basic and diluted for 2009 respectively.

The decrease in Net Income is primarily the result of a 60% decrease in TCE to $17,039 per day for the nine months ended September 30, 2010 as compared to $42,127 per day in the prior period, as well as a $3.8 million increase in interest expense from $5.3 million to $9.1 million in the respective period and losses of $4.3 million relating to interest rate swap agreements of our debt facilities as compared to $1.4 million in the prior period.

Fleet Employment
During the third quarter 2010, we secured time charters for four of our vessels as follows:

The M/V African Glory, a 1998 built and 24,252 dwt Handysize dry bulk carrier, entered into a two year time charter agreement with a profit sharing arrangement to a charterer we believe to be first class. The vessel is chartered at a floor rate of $7,000 per day and a ceiling of $12,000 per day, with a profit sharing arrangement of 75% for owners and 25% for charterers to apply to any amount between the floor and the ceiling. For any amount in excess of the ceiling the profit sharing arrangement will be 50% for owners and 50% for charterers. The calculation of the rate is based on the adjusted Time Charter Average of the Baltic Supramax Index (BSI). The vessel commenced its new charter on November 11, 2010.

The M/V African Joy, a 1996 built and 26,482 dwt Handysize dry bulk carrier, entered into a time charter agreement for a period of 11 to 13 months with a charterer we believe to be first class at a charter rate of $14,000 per day. The charterer has the option to extend the charter for another 11 to thirteen 13 months at the same rate. The vessel commenced its charter on October 30, 2010.

The M/V Asian Grace, a 1999 built and 20,412 dwt Handysize dry bulk carrier, entered into a two year time charter agreement with a profit sharing arrangement to a charterer we believe to be first class. The vessel is chartered at a floor rate of $7,000 per day and a ceiling of $11,000 per day, with a profit sharing arrangement of 75% for the company and 25% for the charterer to apply to any amount between the floor and the ceiling, and for any amount in excess of the ceiling, the profit sharing arrangement will be 50% for the Company and 50% for the charterer. The calculation of the rate is based on the adjusted Time Charter Average of the BSI. The vessel commenced its new charter on September 15, 2010.

The M/V Hamburg Max, a 1994 built, 72,338 dwt Panamax vessel, was entered into a time charter agreement for a period of about 23 to about 25 months with a profit sharing arrangement to a charterer we believe to be first class. The vessel is chartered with a floor rate of $21,500 per day and a ceiling of $25,500 per day, with a 50% profit sharing arrangement to apply to any amount in excess of the ceiling. The spread between floor and ceiling will accrue 100% to the Company. The calculation of the rate is based on the Time Charter Average of the Baltic Panamax Index (BPI). The vessel commenced its new charter on August 31, 2010.

Following these charter arrangements, the company has secured 98% of its operating days for 2010, 78% for 2011, 38% for 2012 and 19% for 2013 under period employment.
 

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