Two Time Charters with Costamare Bulkers Inc.; Updating Estimates

Strong results give us room to raise our target again

Strong results allow us to raise our estimates and price target

December-quarter preview

Michael Heim

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Transportation

Seanergy Maritime Holdings Corp

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<p><strong>Pricing</strong></p>
<p>Shipping rates in the fourth quarter were $24,290/day up 44% year over year and 63% quarter over quarter. The Baltic Exchange Dry Index rose steadily beginning in November and then spiked up right at the end of the year. We raised our estimates to reflect higher rates in February, but rates came in even higher than we had expected.</p>
<table border="1" style="border-collapse: collapse;width: 710px">
<tbody>
<tr>
<td style="width: 149px">
         </td>
<td style="width: 65px">2023-4Q</td>
<td style="width: 69px">2022-4Q</td>
<td style="width: 73px">2023-3Q</td>
<td style="width: 79px">Noble Est.</td>
<td style="width: 275px">Comments</td>
</tr>
<tr>
<td style="width: 149px">Vessels</td>
<td style="width: 65px"> 17</td>
<td style="width: 69px"> 17</td>
<td style="width: 73px">16</td>
<td style="width: 79px"> 17</td>
<td style="width: 275px"> 18 ship coming in 2024-2Q</td>
</tr>
<tr>
<td style="width: 149px">Ownership Days</td>
<td style="width: 65px"> 1,541</td>
<td style="width: 69px"> 1,569</td>
<td style="width: 73px">1472</td>
<td style="width: 79px"> 1,536</td>
<td style="width: 275px">
         </td>
</tr>
<tr>
<td style="width: 149px">Utilization</td>
<td style="width: 65px"> 99.3%</td>
<td style="width: 69px"> 97.2%</td>
<td style="width: 73px">99.2%</td>
<td style="width: 79px"> 99.0%</td>
<td style="width: 275px">
         </td>
</tr>
<tr>
<td style="width: 149px">Operating Days</td>
<td style="width: 65px"> 1,530</td>
<td style="width: 69px"> 1,525</td>
<td style="width: 73px">1460</td>
<td style="width: 79px"> 1,521</td>
<td style="width: 275px">
         </td>
</tr>
<tr>
<td style="width: 149px">TCE Revenues</td>
<td style="width: 65px"> $24,920</td>
<td style="width: 69px"> $17,294</td>
<td style="width: 73px">$15,298</td>
<td style="width: 79px"> $23,000</td>
<td style="width: 275px"> Rise in rates even better than expected</td>
</tr>
</tbody>
</table>
<p>The rise in shipping rates was very fortuitous for Seanergy as it was able to reprice the charter on six of its 17 vessels between November and February. As of March 15, 2024, Seanergy has fixed approximately 93% of the operating days in 2024-1Q at a TCE rate of $22,379/day. Management estimated a 2024-1Q average TCE rate of $23,219/day based on its fixed rates and the average Capesize Forward Freight Agreement rate of $34,446/day. Seanergy typically receives a premium to index pricing because its ships are larger, newer, and generally fitted with scrubbers.</p>
<p><img decoding="async" src="https://www.noblelinx.com/x/research/images/reports/MDI.jpg" style="width: 331px;height: 401px" /><br />
   </p>
</p>
<p>After the first of the year, shipping rates fell sharply to a point near historical levels. However, in recent weeks, rates have begun to rise again. Seanergy has fixed its rates for 58% of 2024-2Q operating days at a rate of $28,300/day. This fixed rate, combined with an improving spot rate, should lead to favorable first half results. Looking beyond 2023-2Q, approximately one vessel comes off charter each month. This will most likely mean fairly stable cash flow going forward with a modest exposure to shipping rate changes.</p>
<p> &#8212;&#8212;&#8212;- page break &#8212;&#8212;&#8212;-</p>
<p><strong>Financial Results</strong></p>
<p> Higher-than-expected shipping rates lead to better-than-expected revenues, cash flow, and earnings. The revenue beat of roughly $4.5 million led to an operating income beat of $5 million. Operating cost for the quarter were $1 million below expectations. Results for the fourth quarter also benefited from $1.3 million for the interest and other income line versus flat results in recent quarters. EBITDA and net income results surpassed expectations by $7 million due to the aforementioned line items.&nbsp;</p>
<table border="1" style="border-collapse: collapse;width: 714px">
<tbody>
<tr>
<td style="width: 170px">($ millions except EPS)</td>
<td style="width: 60px">2023-4Q</td>
<td style="width: 57px">2022-Q</td>
<td style="width: 73px">2023-3Q</td>
<td style="width: 82px">Noble Est.</td>
<td style="width: 272px">Comments</td>
</tr>
<tr>
<td style="width: 170px">Net Revenues</td>
<td style="width: 60px">$39.4</td>
<td style="width: 57px"> $28.5</td>
<td style="width: 73px">$24.5</td>
<td style="width: 82px"> $35.0</td>
<td style="width: 272px"> Reflects higher than expected TCE rate</td>
</tr>
<tr>
<td style="width: 170px">Net Income (Loss)</td>
<td style="width: 60px"> $10.8</td>
<td style="width: 57px"> $0.5</td>
<td style="width: 73px">($5.0)</td>
<td style="width: 82px"> $3.6</td>
<td style="width: 272px">Results helped by rise in other income</td>
</tr>
<tr>
<td style="width: 170px">Adjusted Net Income</td>
<td style="width: 60px"> $11.4</td>
<td style="width: 57px"> $0.9</td>
<td style="width: 73px">($2.6)</td>
<td style="width: 82px"> $6.0</td>
<td style="width: 272px">
         </td>
</tr>
<tr>
<td style="width: 170px">EPS Diluted</td>
<td style="width: 60px"> $0.55</td>
<td style="width: 57px"> $0.03</td>
<td style="width: 73px">($0.28)</td>
<td style="width: 82px"> $0.18</td>
<td style="width: 272px">
         </td>
</tr>
<tr>
<td style="width: 170px">Adjusted EPS Diluted</td>
<td style="width: 60px"> $0.58</td>
<td style="width: 57px"> $0.05</td>
<td style="width: 73px">($0.14)</td>
<td style="width: 82px"> $0.30</td>
<td style="width: 272px">
         </td>
</tr>
<tr>
<td style="width: 170px">EBITDA</td>
<td style="width: 60px"> $23.3</td>
<td style="width: 57px"> $12.9</td>
<td style="width: 73px">$7.1</td>
<td style="width: 82px"> $15.8</td>
<td style="width: 272px">
         </td>
</tr>
<tr>
<td style="width: 170px">Adjusted EBITDA</td>
<td style="width: 60px"> $23.9</td>
<td style="width: 57px"> $13.3</td>
<td style="width: 73px">$9.5</td>
<td style="width: 82px"> $17.8</td>
<td style="width: 272px">
         </td>
</tr>
</tbody>
</table>
<p> Interest expense held steady at $5 million per quarter. When asked about financing the acquisition of the Titanship and the Iconship this summer, management indicated that it maintains a balance sheet near 50% equity and 50% debt implying that the acquisitions may be partially financed with debt. We have modeled in a $25 million increase in debt split between the second and third quarter. Management had previously indicated a plan to reduce debt prior to announcing the vessel acquisitions.</p>
<p>Seanergy announced a special $0.075 cash dividend to be paid in April. The announcement of a special dividend is interesting, not because the company is starting to generate positive operating cash flow, but because it may also be issuing debt to finance vessel acquisitions. Equally interesting, the company announced a new share repurchase plan in the same month it announced an At The Market (ATM) equity offering program. We view the announcements as a means of increasing the company&#8217;s financial flexibility.</p>
<p><strong>Things we learned this quarter</strong><br />
   </p>
<ul style="list-style-type: disc">
<li>The Board announced a $0.075 special cash dividend.</li>
<li>A new $25 million share repurchase plan announced in December.&nbsp;</li>
<li>A new $30 million ATM program announced in December. $2.3 million issued since announcement.</li>
<li>Seanergy fully repaid remaining portion of convertible note.</li>
<li>Seanergy acquired a 2013-built Japanese Capesize vessel in February for $33.4 million with estimated delivery in 2024-2Q.</li>
<li>Management extended six charters at favorable prices</li>
<li>Management expects TCE rate of $23,219 in the 2024-1Q. 93% fixed at $22,379. Spot has risen to $34,446.<br />
     </li>
<li>Locked in half of 2024-2Q operating days at $28,300</li>
<li>Lawsuit filed on March 6th alleging violation of fiduciary duties in connection with preferred stock issuance</li>
</ul>
<p><strong>Conclusion</strong><br />
   </p>
<p> The rise in shipping rates in December led to favorable results for Seanergy in the fourth quarter and the year. More importantly, it has improved the outlook for the company in 2024 because the company repriced several charters and face favorable repricing as the year progresses. Based on the positive result and improving outlook, we are raising our 2024 revenue estimate to $151 million from $131 million. We are also raising our adjusted EPS estimate to $1.42 from $0.95. Finally, we are raising our price target on the shares of SHIP to $12 per share from $10 per share.</p>


Seanergy Maritime Holdings Corp (SHIP)

Strong results allow us to raise our estimates and price target

Fundamental Analysis:

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Two Time Charters with Costamare Bulkers Inc.; Updating Estimates (SHIP)

Strong results give us room to raise our target again (SHIP)

Strong results allow us to raise our estimates and price target (SHIP)

December-quarter preview (SHIP)

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