Thank you for standing by, ladies and gentlemen, and welcome to Seanergy Maritime Conference Call on the Third Quarter 2018 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and Chief Executive Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions]. I must advise you that this conference is being recorded today. The forward-looking statements. Please be reminded that the Company publicly released its financial results which are available to download on the Seanergy website at seanergymaritime.com. If you do not have a copy of the press release, you may contact Capital Link at (212) 661-7566, and they will be happy to send it to you. Before turning the call over to Mr. Tsantanis, we would like to remind you that this conference call contains forward-looking statements, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events and the Company's growth strategy and measures to implement such strategies. Words such as expect, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to competitive factors in the market in which the Company operates, risks associated with operations outside the United States, change in rules and regulations applicable to the shipping industry and other risk factors included from time-to-time in the Company's Annual Report on Form 20-F and other filings with the Securities and Exchange Commission, the SEC. The Company's filings can be obtained free of charge on the SEC's website at www.sec.gov. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Now, I will pass the floor to Mr. Tsantanis. Please go ahead, sir.

Thank you, Sarah. Good morning, everyone. And thank you for joining us today to discuss our third quarter and nine month results for 2018. During the third quarter of 2018, we saw the Capesize market normalizing after various disruptions in the first half of the year and fleet rates improve significantly. Our fleet was very well-positioned to capitalize on the higher earnings environment and this was reflected in our results. In addition, through the first nine months of 2018, we have focused our efforts on optimizing our capital structure, enabling us to pursue future growth, while at the same time, we've completed our long-term strategic goal to position Seanergy as a pure-play Capesize owner. I would like to start the call by discussing the most important quarter developments that have been taking place since our last financial update in August. Firstly, we have completed the sale of our two Supramax vessels, the M/V Guardianship and Gladiatorship, and acquired an additional Capesize vessel that was built in 2010 at Daewoo in South Korea. We used the sale proceeds from the two Supramaxes to partly finance the acquisition of the new Cape, and we also agreed with UniCredit Bank to roll over the entire outstanding loan amount of the Supramaxes on the new Cape under substantially the same terms. This attached to the good working relationship that we maintain with our lenders. Through the sale and purchase transactions, Seanergy became the only pure-play Capesize company in the US capital markets, while we also increased our exposure to the positive supply and demand fundamentals of the Capesize sector. Regarding our operating performance, the daily Time Charter Equivalent rate or TCE achieved in the third quarter and nine months period of 2018 was $16,914 and $12,497, respectively, marking improvements of 31% and 45% over…

Thanks, Stamatis. Good morning also from my side and thanks for joining our call. Regarding our financial results for the third quarter of the year, our performance was positively impacted by the improved charter rate seen in the market since June, leading to a 40% increase in our net revenues, which stood at $26.4 million as compared to $18.9 million in the same period last year. Also stability in the third quarter of the year was impacted by $6.9 million non-cash impairment expense associated with the sale of our two Supramax vessels. When adjusting for this one-off effect, our adjusted EBITDA for the quarter was equal to $10.1 million, up about 260%, compared to the adjusted EBITDA of the third quarter of 2017 of $2.8 million, while we also recorded an adjusted net income of $1.3 million as compared to an adjusted net loss of $4.9 million in the third quarter of 2017. It is important to also highlight at this point that the EBITDA achieved by our company in a normalized earnings environment as well as for the third quarter of this year, when annualized is equal to approximately [$40 million], a figure that exceeds our current market cap. Going to the nine month period that ended on September 30, 2018, the Company's net revenues increased by 28% to $64.5 million and adjusted EBITDA increased by more than 160% to $16.6 million. Going forward, I would like to state two important points that we believe are likely to improve our financial performance. Firstly, the expedited reduction of bank debt on the back of the steep scheduled amortization of our facilities, in combination with the recently signed monthly transactions and amendments to the convertible notes will result in lower interest and finance expenses improving our bottom-line profitability and cash flows.…

Thanks, Stavros. Moving onto the review of our industry, I would like to start with the secondhand asset values and the general supply of ships. After a number of months with large Capesize vessel values, the past nine months have seen further increase in secondhand prices, especially for 10 and 15-year old vessels, the prices have risen at a faster rate so far in 2018. In addition, newbuilding contracting for standard Capesize vessels continues to be almost zero for more than two years. We believe that the increased market volatility and uncertain expectation for future economic growth as well as tighter financial conditions will prolong this positive trend of low vessel contracting. However, the improved market conditions have led to a much slower pace for demolition. This is likely to lead to a slightly higher than expected fleet growth in the Capesize fleet in 2019 at around 3.6%, including deliveries of the VLOC vessels. This is of course far below the [served collaborators]. It is important to note though that the upcoming IMO 2020 regulations may lead to additional tonnage supply squeeze. Hence, we expect the effect of slow steaming to be significant. Recent calculations made by leading shipbrokers suggest that the slowdown of 2 knots of speed in the average global speed of the fleet is equal to a 12% reduction in effective fleet supply. Furthermore, within 2019 and during the first month of 2020, the global Capesize fleet preparations for the new rules -- the new environmental rules including fuel tank cleaning for the use of new Low Sulphur Fuel and the dry dockings required for the scrubber installations are also likely to lead to considerably lower effective supply of tonnage, which may peak towards the end of 2019. As we all know, vessel supply has historically proven…

Thank you. [Operator Instructions]. We do have our first question. Please go ahead. Your line is open.

This is [Astina Marcos] with Hermes. I mean people are very focused on the Capes at the moment, which has been an unusual drop given the fleet. And I guess just a lot of potential explanations out there and I know it's always been a volatile sector dominated by the miners and then -- and Chinese steel mills. But I am very curious to hear, what you think has been the most important factors to the sell off? And then maybe also what do you think has driven rates up again in recent week?

We recently came back from a regular trip to Singapore where we meet all the major iron ore and coal charterers like Vale, Rio Tinto, all big players. There is no apparent reason why the recent drop has happened. I think it's a combination of various effects. Most importantly, it's basically the paper -- saw -- who -- saw a very aggressive selling off of FFAs happening very recently. Nothing happened as far as volumes were concerned, so the actual volumes coming out of Brazil and Australia are actually increasing instead of decreasing. So, we see a very high degree of vessel chartering. We believe that this was basically a psychological matter and also a use of the Chinese spot inventories, which now in turn is going to be reversed. We saw the index dropdown 20,000 tonnes a day with recovery back up 16,000 and now it's dropped again to about 15,000. I think we'll continue to see the share volatility throughout December and maybe January, until we get into the supply cut in the first half of '19 where we expect the market to shoot up considerably.

And what about the use of old scraps, it would seem that the Chinese are using we think 40 million to 50 million tonnes more of iron ore equivalent, which is more than a month of Brazilian export. I mean what potential do you think China's mills have to increase use of scrap steel? I guess they're using relatively small percentage in an overall steel production in comparison to mills elsewhere?

Generally, we see that the export amounts of cargo coming out of Brazil and Australia will continue to be very strong. When we shutdown, we spoke to the big miners, no one actually is worried about the Chinese appetite to retain the same levels of imports anything increasing further. So, we don't really see any difference as far as the seaborne transportation of iron ore and coal is concerned. So, we still see very healthy numbers in 2019 and 2020. We’ve had a minor -- bundled it all now, but that's behind us. I think that we will see a very healthy market going forward.

And final one, I mean the five year charters that you have on the Championship, I mean is that included kind of an additional compensation based on, on the spreads of HFO, MGO or compliant fuel, which is interesting. Are you able to kind of elaborate on this point? What portion of the savings you're entitled to and what not?

Yes, well, basically, I think that our overall approach to this particular 2020 IMO implementation is probably the most prudent and very innovative, to put it this way. Not only we have the charterers paying for the full cost of the scrubber installation which is a very important figure by itself, but also we have full profit sharing -- sorry full payment during the installation -- the scrubber installation, the procurement of the equipment, and of course the all-pipe. Generally as a rule of thumb, we have 30% appreciation -- participation if the spreads exceed $200 -- $300, sorry. It targets an escalating but as a rule of thumb, you can use that rule, we will be getting an extra revenue of 30% above $300.

Thank you. We will now take our next question. Please go ahead. Your line is open.

This Joakim Hannisdahl from Cleaves Securities. I was just wondering, assuming Capesize rates will continue to improve in the coming years, what's your thoughts on the capital allocation? Are you going to focus on paying down debt or is there an element of distribution through the equity as well in the interim time?

Well, as you saw in the current quarter with average Capesize rate of about $18,500 per day, we managed to achieve an EBITDA of $10 million for the quarter alone. If you annualize that at $18,500 of Capesizes, we make more than $40 million of EBITDA, which again is a very, very strong number. Going forward, at $20,000 or even $25,000 Capesize rate, that number becomes $50 million or $60 million. So, we have a very high degree of leverage on the upside given the way that we have structured the Company. We already have a very good debt repayment schedule for the banks. I mean the companies are paying around $20 million, $22 million of principal payment to banks every year. So, the surplus amount will be fully committed to using for capital -- to return capital to shareholders, we’re fully committed on that.

Just one more from me. What’s your short-term debt as of the end of quarter? Can you give that number?

Short-term debt? Yes, of course give a second. It’s $20 million, short-term.

Thank you. We have one further question. And the line is now open. Please go ahead and ask your question.

Good morning, Stamatis. This is Poe Fratt from Noble Capital Markets. Could you just walk us through sort of the calculation, or the -- how you’re looking at putting scrubbers on the rest of the fleet? And whether the cost cuts net of installing those scrubbers would be roughly in that $12.5 million range?

Yes. First of all, we anticipate that the overall cost of installing the scrubbers including the all-pipe is around $2.75 million for a Capesize vessel. So, it breaks down to around $1.4 million for -- $1.4 million, $1.5 million for the equipment and about $1 million for the installation and around quarter of a million for the all-pipe. And this is a breakdown of the cost for the scrubber installation. Now, I must say that the scrubbers that Seanergy is using for this installation are not typically in line with other companies have decided to install, but we're using the so-called U-type scrubbers that are higher quality and more efficient as far as the particular exercise is concerned. For the remaining of the fleet, to be honest, we have not really decided what to do. First of all, as a company we took a view that this investment for the scrubbers should not be borne by the Company or its shareholders. It’s a decision that we took after a very careful examination of the full market fundamentals. And we said that, if we have to continue this investment, we will do it in cooperation with the charterers. We have options for 2 or 3 more ships with the same charterers. So, we’re now in discussions whether to extend 2 or 3 ships more to these charterers. And that’s going to leave basically one, two of the older ships without scrubbers at the end of the year, which will be burning the compliant fuels. But overall, it’s a long discussion that we’ve been having since the beginning of 2018. And we will decide in the next 2 or 3 months whether we will proceed with the same charterers or not. However, I must say that we have fully secured the equipment and the float in shipyards, which is a very precious, uncommon thing today in the event which is crucial.

And it sounds like -- I’m sorry. Stamatis, you said that you have options on 2 or 3 additional vessels or Capes with charterers. And is -- that was -- did the terms of those options look like the same terms as the agreements you've already signed as far as the charterer bearing the installation cost and then you sharing on some of the potential upside, if you see a spread that’s -- I think you said before it’s 30% above $300 a tonne?

Yes. It's pretty much the same.

And then could you -- Stavros, could you give us an idea of sort of OpEx for 2019 as the fleets changed a little bit?

Following the sale of the Supramaxes, we expect that the OpEx will be streamlined, I mean, based on the homogeneous Capesize fleet and we expect an improvement in the older figure move by about 5%.

And then Stavros -- or I'm sorry, Stamatis, when you look at your capital allocation, you said potentially returning capital to shareholders. Is growth still an objective and could you give us an idea of how the M&A market is looking right now?

Absolutely. First of all, I must say that the transaction that we did recently, the recent Capesize that we bought for about $28.7 million gross. The day of the acquisition and the day of the delivery as well, it’s been valued by various shipbrokers in excess of $30 million. So, the Company has a very good and great proven track record in obtaining tonnage at very competitive prices as far as the market is concerned. We are very active in acquiring tonnage, especially in the last 2 or 3 years, and we have a deal flow which I'm not sure it's not available to many other companies out there. If we have the capacity to buy 2, 3, 4 more ships, we can do it very easily. And we have the ability. I mean we have identified a bunch of acquisition targets that we will move into. Right now, our focus in the first half -- sorry, in the first three months of the year and year-to-date was mostly to optimize the balance sheet and create the required liquidity in order to proceed various acquisitions which we managed to do so. If we're ready to commit additional tonnage then at the time, we will of course do so. I mean like I said, we're very active in this case and we have an excellent deal flow.

And you've been very active on the financing side. I think I heard that short-term debt currently -- or at recent at the end of the third quarter was $20 million. Do you have either current cash level or an expected year-end 2018 number as far as cash?

Assuming no major liquidity event, we expect end of the year that to be around $215 million and overall cash position will be between $5 million and $10 million.

There are no further questions. Sir, please continue. Mr. Tsantanis, there are no more questions.

Okay, Sarah. Well, thank you very much. And I would like to thank everyone for participating in our call. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.