Results fall on lower shipping rates but Seanergy is finding ways to offset the decline

Estimates and Price Target Adjusted for 10-1 Reverse Split and Continued Shipping Rate Weakness

Results reflect weakening prices, as expected

Model Fine Tuned For Lower Shipping Rates and Higher Interest Rates

Michael Heim

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Industrials

Transportation

Seanergy Maritime Holdings Corp

<p><strong>Fourth-quarter revenues fell sharply once again in response to lower shipping rates.</strong> Shipping rates continued to decline. The average TCE rate fell 53% year over year and 15% quarter over quarter. Rates could have been worse if not for Seanergy&#8217;s fleet renewal strategy that has reduced ship age and increased the use of scrubbers. As a result, realized TCE rates reflect a 16% premium over the Baltic Capesize Index. Seanergy was able to partially offset the impact of lower rates because of the net addition of ships in 2022 and thus a higher number of operating days. Operating days will continue to rise in upcoming quarters with the addition of the M/V Patriotship in November and the M/V Paroship in December. More importantly, the company was able to generate new revenues by providing management services to United Maritimes Corporation, which was spun off in July.</p>
<table border="1" style="border-collapse: collapse;width: 100%;height: 116px">
<tbody>
<tr style="height: 18px">
<td style="width: 20%;height: 18px">
         </td>
<td style="width: 20%;height: 18px">2022-4Q</td>
<td style="width: 20%;height: 18px">2021-4Q</td>
<td style="width: 20%;height: 18px">2022-3Q</td>
<td style="width: 20%;height: 18px">Noble Est.</td>
</tr>
<tr style="height: 18px">
<td style="width: 20%;height: 18px">Vessel Revenues (mil)</td>
<td style="width: 20%;height: 18px">$27.2</td>
<td style="width: 20%;height: 18px">$56.7</td>
<td style="width: 20%;height: 18px">$33.0</td>
<td style="width: 20%;height: 18px">$25.5</td>
</tr>
<tr style="height: 26px">
<td style="width: 20%;height: 26px">Fees from related parties</td>
<td style="width: 20%;height: 26px">$1.3</td>
<td style="width: 20%;height: 26px">$0.0</td>
<td style="width: 20%;height: 26px"> $1.0</td>
<td style="width: 20%;height: 26px">$1.0</td>
</tr>
<tr style="height: 18px">
<td style="width: 20%;height: 18px">Revenues, Net&nbsp;</td>
<td style="width: 20%;height: 18px">$28.5</td>
<td style="width: 20%;height: 18px"> $56.7</td>
<td style="width: 20%;height: 18px"> $34.0</td>
<td style="width: 20%;height: 18px"> $26.5</td>
</tr>
<tr style="height: 18px">
<td style="width: 20%;height: 18px">Operating Day</td>
<td style="width: 20%;height: 18px"> 1,525</td>
<td style="width: 20%;height: 18px"> 1,493</td>
<td style="width: 20%;height: 18px"> 1,544</td>
<td style="width: 20%;height: 18px"> 1,564</td>
</tr>
<tr style="height: 18px">
<td style="width: 20%;height: 18px">TCE Average Rates</td>
<td style="width: 20%;height: 18px"> $17,294</td>
<td style="width: 20%;height: 18px"> $36,614</td>
<td style="width: 20%;height: 18px">$14,989</td>
<td style="width: 20%;height: 18px"> $16,302</td>
</tr>
</tbody>
</table>
<p> <strong>Lower revenues adversely affected bottom-line results, but things were not as bad as expected.</strong> Adjusted EBITDA fell 67% year over year and 34% quarter over quarter in response to lower revenues. A similar story can be said of net income. That said, results actually came in better than expected. Daily vessel operating costs were $6,651 during the quarter, down from $7,184 last year and $7,593 in the third quarter. Operating costs (crews, supplies, insurance, etc.) have been trending upward all year. This quarter&#8217;s downtick is hopefully a sign that cost pressure is beginning to abate, although it is worth noting that any fixed operating costs are now being spread out over additional ships. Financing costs were below expectations despite the investment in new ships. Management has been active refinancing debt when possible. Of particular note was the year-over-year decrease in diluted share count. Seanergy repurchased convertible notes last summer reducing share count. In a call with investors, management indicated its hope to repurchase the remaining $3 million of convertible notes in 2023.</p>
<table border="1" style="border-collapse: collapse;width: 100%">
<tbody>
<tr>
<td style="width: 20%">
         </td>
<td style="width: 20%">2022-4Q</td>
<td style="width: 20%">2021-4Q</td>
<td style="width: 20%">2022-3Q</td>
<td style="width: 20%">Noble Est</td>
</tr>
<tr>
<td style="width: 20%">Adjusted EBITDA (mil)</td>
<td style="width: 20%">$12.5</td>
<td style="width: 20%">$38.8</td>
<td style="width: 20%">$19.0</td>
<td style="width: 20%"> $11.0</td>
</tr>
<tr>
<td style="width: 20%">Adjusted Net Income</td>
<td style="width: 20%">$0.9</td>
<td style="width: 20%">$27.9</td>
<td style="width: 20%">$7.6</td>
<td style="width: 20%"> $(0.6)</td>
</tr>
<tr>
<td style="width: 20%">Adjusted EPS (diluted)</td>
<td style="width: 20%">$0.05</td>
<td style="width: 20%">$1.36</td>
<td style="width: 20%">$0.04</td>
<td style="width: 20%"> $(0.03)</td>
</tr>
<tr>
<td style="width: 20%">Diluted Shares (mil)</td>
<td style="width: 20%">17.897</td>
<td style="width: 20%">20.523</td>
<td style="width: 20%">17.909</td>
<td style="width: 20%">17.909</td>
</tr>
</tbody>
</table>
<p> <strong>Focus remains on returning proceeds to shareholders.</strong> The company declared a $0.025 per share quarterly dividend to be paid in April 2023. The dividend is unchanged from the previous level even as the payment will represent approximately half of the quarter&#8217;s adjusted net income. Annualized, the $0.10 per share level reflects a yield of almost 16%. In addition, Seanergy repurchased $35.5 million of common shares and convertible securities since December 2021. Stamatis Tsantanis (Chairman &amp; CEO) has been very vocal in his support of favorable industry fundamentals, stating that &#8220;we already see signs of recovery with spot rates and forward curves moving up substantially in recent days.&#8221; Mr. Tsantanis has indicated that he believes the shares of Seanergy are not fairly representing the company&#8217;s underlying value and has backed these statements by recently committing to purchase $1 million in SHIP shares on the open market.</p>
<p><strong>We are gaining confidence that the downslide in the shipping market may be approaching the end and that companies like Seanergy are in a good position to start reporting more favorable results.</strong> March-quarter results, not doubt, will be ugly as shipping rates continued to slide until March. Management estimates an average 2023-1Q TCE rate of $10,191. Comparisons will be tough with spot shipping rates being less than one-third the amount in the March quarter last year. However, we are beginning to believe the June quarter will show signs of improved results if rates continue to rise. And, if history is any guide, the stock price of shipping companies will rise well before improved results are reported. We reiterate our outperform rating and our $10 price target for the shares of SHIP.<br />
   </p>


Seanergy Maritime Holdings Corp (SHIP)

Results fall on lower shipping rates but Seanergy is finding ways to offset the decline

Fundamental Analysis:

Rating: Log in to view

Results fall on lower shipping rates but Seanergy is finding ways to offset the decline (SHIP)

Estimates and Price Target Adjusted for 10-1 Reverse Split and Continued Shipping Rate Weakness (SHIP)

Results reflect weakening prices, as expected (SHIP)

Model Fine Tuned For Lower Shipping Rates and Higher Interest Rates (SHIP)

Inbox Intel from Channelchek.