Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Holdings Corp. Conference Call on the Second Quarter Ended 30th June, 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. At this time, all participants are in listen-only mode. There will be a presentation following by a question-and-answer session. [Operator Instructions] Please be advised that this conference call is being recorded today Wednesday, 2nd of August, 2023. The archived webcast of the conference call will soon be made available on the Seanergy website, www.seanergymaritime.com. To access today's presentation and listen to the archived audio file visit Seanergy website following the Webcast & Presentations section under the Investor Relations page. Please now turn to the slide two of the presentation. 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 cause the actual results to differ materially from those in the forward-looking statements is contained in the second quarter ended 30th of June, 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 speaker 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 second quarter and first half of 2023, while also announcing the distribution of another cash dividend. I'm very pleased to report a profitable quarter for Seanergy with our daily time charter equivalent outperforming the market index. We achieved a daily time charter equivalent of $18,700 or 20% above the index average for the quarter, leading to a quarterly net revenue of $28.3 million and net income of $700,000. This represents a sequential improvement compared to the first quarter of 2023, whereby revenue was $18 million, and net loss came in at $4.2 million. In the second quarter, the Capesize market recovered from the seasonal weakness seen in the start of the year, with the Baltic Capesize Index averaging at $15,600, up from $9,100 in the first three months of the year. Demand for seaborne transportation remains strong, but charter rates came under pressure at historically low congestion as well as higher deadweight adjusted vessel speeds have resulted in a temporary effective vessel oversupply. It is encouraging to see strong increased ton-mile demand for key raw materials, and I'm very optimistic that the negative effects of the low congestion have already picked. During the quarter, we remained consistent with our shareholder distribution strategy, while looking to expand our fleet through accretive opportunities. As we will discuss in more detail, we agreed to acquire a Newcastlemax vessel at a great price, while we also repurchased about 2% of our common shares in the open market at a significant discount over the current stock price. Lastly, we continue to optimize our balance sheet through $54 million of refinancing transactions that will reduce our interest rate margins and help neutralize a…

Thank you, Stamatis. And welcome, everyone to our second earnings call for 2023. Let us start by reviewing the main highlights of our financial statements for the second quarter and six months period that ended on June 30, 2023. Amid the weaker-than-expected Capesize market, our financial performance was satisfactory with net revenue for the quarter reaching $28.3 million. Net revenue for the first half of the year was equal to $46.4 million. These figures are lower than the respective period of 2022, albeit once again, in terms of PCE, we outperformed the BCI by approximately 20%. Meanwhile, our adjusted EBITDA in the second quarter was equal to $15.7 million and $19.6 million in the first half of the year. The respective figures for last year were $17.3 million and $34.2 million, respectively, Nevertheless, in the second quarter of 2023, we returned to profitability, recording a net income of 700,000, trimming the net loss for the year so far to $3.5 million, with the bottom of the market now in the rare mirror, we are optimistic that we will continue on a profitable trajectory for the rest of the year. Moving on to our balance sheet. Despite the volatile market, the increased interest rates as well as our continuous efforts to return capital to our shareholders through dividend distributions and buybacks, we retained a solid cash position of approximately $22.5 million or $1.4 million per vessel. On the debt front, we retained a moderate debt ratio 50%, while we achieved to even reduce our net debt since the beginning of the year by approximately 7%. The net debt at the end of the first half of the year stood at $212 million, a figure fully covered by the scrap value of our fleet based on current scrap prices. I will return…

Thank you, Stavros. In the current year so far, we have seen a very healthy increase in the seaborne transportation of the main raw materials like iron ore, coal and bauxite. However, the Capesize charter rates have been negatively affected by the increase in the effective supply of tonnage without any material increase in the actual number of new vessels. The effective tonnage supply increase is a result of the reduction in port congestion to historical low levels and the higher deadweight adjusted vessel speeds observed particularly in the larger ore carriers. Such higher speeds are slightly counterintuitive to say the least, given the recent emphasis placed on the reduction of the industry's carbon footprint. This has been the case for all dry segments across the board as overall dry bulk ton mile demand in the first half of the year grew approximately 5.5% and while effective tonnage supply was up by 7.1% according to broker reports. Looking at the actual order book of new vessels, it currently stands at the lowest levels in several decades. Considering the importance of ship supply when it comes to long-term dry bulk market direction, we remain optimistic for the positive dry bulk trend. Overall, dry bulk ton miles are expected to grow by around 3.3% and 2.5% in 2023 and 2024, respectively, with corresponding fleet growth of 2.9% and 1.9%, respectively. Given that the large part of the 2025 deliveries have already taken place and that the trend of declining congestion seems to have reached the bottom over the past months. The balance seems quite positive. Moving on to Capesize demand. China iron ore imports in the first half of 2023 were up by 7.7% year-on-year, which is a massive increase. As we discussed in our last quarterly update, the lower iron ore…

[Operator Instructions] And the first question comes from the line of Tate Sullivan from Maxim Group. Your line is open. Please ask your question.

Hello. Thank you, good day. I wonder, if we could start with the press release from July 6, which included the repurchase details as well as the bareboat-in charter acquisition of the Newcastlemax. Can you start and why you structured the acquisition that way and the benefits of that structure please in this current market?

Hello, Tate. Good morning. How are you?

Great. Thank you.

Excellent. So I'm going to start with the fact that the fleet of the company was reduced recently due to the sales of the older ships to United Maritime. So we wanted to increase the number of ships under our commercial and technical management. However, we wanted to find ways and not to spend too much of the cash of the company. And we found this bareboat agreement with very prestigious Japanese owners. And they accepted that we charter in the ship for a period of time of about a year. And then we have a purchase option to acquire it. So overall, I think it's a great deal for the company because we increased the operating leverage significantly by Newcastlemax vessel. At the same time, the cash outlay remains quite limited. So we have cash for other purposes well, like stock buybacks or whatever. And the overall deal is a great deal because the -- all things been into consideration, the bareboat hire the advanced payments as well as the purchase option. The overall price of that vessel is quite low. It's lower than the recent transactions we've seen in the market. So it's a win-win-win situation for us, and that's why we decided to do it.

And did I hear you say…

That in one of the remarks that it should have a premium to the DCY as a 2011 vessel? And why is that going to be the case.

It does indeed. Yes. Just to put things into perspective, we're at in the filings of other companies. that they have acquired new Newcastlemax vessels for something in the region of close to $80 million, those ships, we understand they are chartered to the BCI at 145% to 150%, so 1.45%, 1.5%. This ship we bought for a fraction of that price. So we bolted for $30.51 [ph] million something -- and it started -- it's going to be charged to the BCI the premium in excess of 20%. So we're spending a fraction of what other companies are paying for similar tonnage and the revenue-generating capacity of that ship is going to be -- I'm not going to say as good as but very, very good premium over the BCI. So in respect of return on the investment, I say that this is same comparable.

And then the last one on that thank you for the detail is, what in terms of buying the ship at the end of the 12-month bareboat period for $20 million. What do you need to see in the market to exercise that option?

I think we will most likely exercise that option. I don't think that we will not exercise the option. So it's pretty much a high degree of certainty that we will most likely exercise that option.

Great. And one other for me, too. You had higher utilization in the second quarter. That was the main factor that will cause the revenue to exceed my expectations of 99% highest in at least 4 quarters. any -- should that decrease in the coming quarters with any scheduled downtime?

I mean we have pretty much reported all the dry docks that we have until the year end. We don't have any material dry docks until the year-end. So I would assume that 98% to 99% is the same assumption for the remainder of the year.

Okay. And then last one for any of the deposits made for the variable charter in 2Q or all the payments related to that are in 3Q and the rest during the second

Rest of this year.

I take this table. The first 3.5 million have already been deposited. So there's only 1 in 3.5 million deposit, which remains at the delivery of the ship, which is estimated that the fourth quarter -- so that's the only remaining outlay before we take delivery of the vessel.

All right. Excellent. Great to hear an update. Have a great rest of the day. Thank you, both.

Thank you, Tate. Have a great day. Bye-bye.

Thank you. Now we're going to take our next question. Please stand by. And the next question comes from the line of Christopher Kay [ph] from Arctic Securities. Your line is open. Please ask your question.

Hello, gentlemen. Congrats on another great call

Hello. Thank you.

So, regarding the Newcastlemax acquisition, it seems like a great deal. And obviously, you're getting quite a good premium compared to conventional capes of running mix compared to BTI and sort of from a strategic standpoint. Are you looking to add more news -- or it is just a lot of a one-off?

Well, I cannot really answer this question. We might have similar opportunities in the future that we will take into serious consideration. If the economics work well for us, it's pretty similar to trade. So these types of ships, they pretty much carry the same cargoes, which is iron ore, coal and bauxite. So from a commercial perspective and from the same, we're going to use the same chapters as we already have in the company that we know and we trust and we have excellent relationship for the last many, many years. So overall, there are good takers to the ship, if it's a good quality, we might as well look at additional Newcastlemax or Capes under this structure. But it's not that we're open for new acquisitions. Overall, for us, it's a more general approach over shareholder rewards as well. So for us, it's going to take -- it will have to be a very good deal to take it into consideration.

Thank you. And sort of when we're looking at asset values now, it seems to be sort of quite disconnected to time charter rates. So what's your view on the current disconnection and I mean something has to give here at least when we're looking at this from a historical perspective. What's your view? What's holding the values up now?

That's a great question. First of all, if you look at the buyers for the Capesize and the Newcastlemax since the beginning of the year, if not for the last two years altogether, they're very, very serious players. You don't have like a speculative acquisitions on the Cape. So you see names that you know that are very serious players and for them it represents a great value in their investment as it is for us. So what we see in the value of a Capesize vessel knowing that the overall order book on an annual basis is around 1% to 1.5%, there's zero, almost zero order book going forward, the fleet is getting older, we have the new regulations coming in. So, the best fundamentals right now, they appear to be in the Capes and the Newcastlemax segment. So, people see that there's a lot of liquidity coming from other segments of the shipping universe, like container ships and tankers, and splashing 30 million to 50 million, depending on the age of the vessel, to acquire donuts, or 20 million to 50 million. For some people it might be a rounding error. So, but overall you see very serious players getting back into the game. And in my opinion, that's a good sign.

Thank you. And sort of looking at your traffic strategy, you obviously have taken on some coverage which has been well-timed, I must say. So, another great job done there. But what is -- what's your view going forward and what rate would you need to see in order to book quite a lot of 2024 dates?

Well, for 2024 I cannot give you an answer because 2024 is going to be the first year that you can have all these regulations kicking in. So in our opinion, you will see a lot of speed adjustments coming in 2024. I would like to remind everyone on this call, the fact that even though people are saying that the average fleet speed is lower than what it used to -- that's actually not correct. If you look at the deadweight adjusted speed of the fleet, it's actually much higher. So if you look at all the ore carriers on C3, ships between 250,000 tonnes and 400,000 tonnes, most of them are going with 14, 15, 16 notes. In my opinion, that's completely inexplicable going at this, kind of, speed and meeting this kind of CO2 up in the atmosphere. So one way or another, they will have to abide by the new regulations, and they will have to cut speeds. We have told many, many times. The reason why the market is at these low levels is not only the congestion, which is at historical low levels, but the fact that the large ore carriers can speed up to this excessive speeds, and that creates a big and temporary oversupply of tonnage. Once that is more regulated and more control and discipline, I expect we're going to see a better market. So to answer your question about 2024, it's the first year that you have not only the CII and the XI, but also the EU ETS. And that's going to be the first mandatory impact for many people calling or not calling EU because there's going to be more disciplined on the speeds. So we're all very much more optimistic for 2024. I'm not going to give you a number about my projections, but I wouldn't be too soon to fix something for 2024 going forward.

Great. Thanks a lot. I guess, I look forward to 2024.

Thank you.

Thanks.

Thank you. [Operator Instructions] There are no further questions. This concludes today's conference call. Thank you for your participation. You may now disconnect. Speakers, please stand by.

Thank you, Nadia. Have a great day.