Seanergy Maritime Holdings Corp. (SHIP) Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Holdings Corp. Conference Call on the Second Quarter and First Half ended June 30, 2026 Financial Results. We have with us Mr. Stamatios Tsantanis, Chairman and CEO; and Mr. Stavros Gyftakis, Chief Financial Officer of Seanergy Maritime Holdings Corp. [Operator Instructions] Please be advised that this conference call is being recorded today, Thursday, July 30, 2026. 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 the Seanergy website following the Webcast and Presentations section under the Investor Relations page. Please now turn to Slide 2 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 and first half ended June 30, 2026 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 speakers today, the Chairman and CEO of the company, Mr. Stamatios Tsantanis. Please go ahead, sir.

Thank you, operator, and welcome, everyone. Seanergy delivered a record second quarter, net revenue of $55.7 million, adjusted EBITDA of $41.5 million and adjusted EPS of $1.32. Our fleet earned $32,355 per day, up 63% year-over-year. This is what a pure-play Capesize and Newcastlemax platform does in a strong market without diluting our story in many vessel classes. When the market is strong, we get all the benefit. For the first 6 months of 2026, fleet time charter equivalent increased by 69% year-over-year to $28,244 per day. Net revenues increased to $97.8 million. Adjusted EBITDA increased by 165% to almost $70 million and adjusted earnings per share were almost $2, actually $1.96 per share compared to an adjusted loss per share in the prior year period. This represents again a record first half performance through our ability to capture the upside of a strong Capesize market while having hedged our downside risk. Looking ahead, the Capesize market prospects for the second half of the year remain constructive based on a resilient commodity demand, constrained effective fleet supply and earnings visibility provided by our forward fixed rate charter coverage. Our Board declared a cash dividend of $0.35 per share. That's our 19th consecutive quarterly dividend, which we have delivered through good and bad markets. We have now returned $108 million to shareholders, and we raised the dividend 75% this quarter compared with the previous one. Moving to our recent fleet renewal initiatives. Since our last update, we have committed approximately $130 million more to acquire 2 high-quality Japanese vessels, both expected to join our fleet in 2029. We also completed the sale of the 2010-built Squireship. These transactions advance our disciplined fleet renewal strategy by reallocating capital from older tonnage into modern fuel-efficient assets at delivery points that align well with the next phase of our fleet requirements. Our latest acquisitions include a scrubber-fitted newbuilding Capesize vessel to be built at a first-class Japanese shipyard scheduled for delivery in the first half of 2029 and the modern 2022-built Capesize vessel constructed in Japan with forward delivery expected in the first half of 2029. Our renewal program now represents an aggregate investment of $591 million. Funding is already advanced on competitive terms as will be detailed in a few minutes by Stavros. I would also like to highlight the successful completion of our inaugural EUR 100 million unsecured corporate bond offering in Greece with demand exceeding the offered amount by more than 2x. Beyond diversifying our funding [Audio Gap] sources it's 5-year bullet structure is particularly well [Audio Gap] matched to the requirements of our fleet investment program. Slide 4, consistent capital returns. Moving on to Slide 4. Seanergy has now returned approximately $3.19 per share to our shareholders through 19 consecutive quarterly distributions since launching our dividend program in 2021. This track record reflects our ability to translate strong Capesize market conditions into consistent and meaningful cash returns. Our approach is simple, to reward our shareholders every quarter, to keep the balance sheet strong, to invest in modern ships, and we're successfully doing all 3 at once, a 27% payout, leverage below 50% and $591 million committed to fleet renewal with prompt deliveries. Rewarding our shareholders remains an important priority to us. Slide 5, strong commercial execution and forward earnings visibility. Turning to Slide 5. During the second quarter of 2026, Seanergy achieved a daily time charter equivalent of approximately $32,400, while our average daily TCE for the first 6 months of the year reached $28,200. As the market heads, we converted a portion of our second quarter days to fixed ahead of the market rise. That kept us a bit below the index in a quarter where rates spiked considerably. It is obvious that we're trying to protect the downside and keep enough upside to the matter. Our index-linked employment gives us direct participation in the market strength, and we run a very high utilization again in the quarter, which highlights the quality of our technical management. At the same time, we continue to manage freight rate volatility selectively. Approximately 55% of our ownership days for the second half of 2026 have been converted at an average daily rate of approximately $30,800. This provides earnings visibility and downside protection for our revenue and cash flows while preserving meaningful exposure to further market upside. Our scrubber-equipped ships continue to benefit from favorable fuel spreads, providing another source of earnings enhancement. Another important point is that since 2024, we have invested approximately $37.3 million in environmental upgrades on the existing fleet, vessel improvements and dry dockings. Having completed the majority of scheduled upgrades in the previous quarters, the company expects only 50 off-hire days approximately for the remainder of 2026 in connection with scheduled dry dockings, vessel repairs and environmental upgrades. Looking further ahead, the superior efficiency of our newbuilding vessels should strengthen their commercial profile and enhance the earnings contribution. Slide 6, fleet renewal program with prompt deliveries. To date, we have contracted 7 modern eco-design Capesize newbuildings with deliveries in 2027 until 2029 and agreed to acquire 2022-built modern Capesize Japanese-built with delivery also in 2029 and sold 3 older vessels. Together, these transactions advance both the growth and renewal of our fleet, improving its age profile, fuel efficiency and long-term earnings capacity. Importantly, 4 of the 8 vessels are scheduled to be delivered to our fleet within 2027, allowing us to meaningfully increase the earnings contribution of our renewed fleet beginning next year. We have now finalized long-term time charters for the 3 2027 delivery newbuildings being constructed in China with leading global counterparties, and I'm talking 4 to 5 years. The structure is very straightforward, floor of $23,100 a day, which covers our cash breakeven from day 1. Above the floor, we earn a premium over the BCI 5TC index up to about $29,750. Above that, we keep half the upside. Therefore, downside is covered while upside is retained. This is another validation of the commercial appeal of our newbuildings as it materially reduces the execution risk associated with the initial phase of our fleet renewal program. Stavros will discuss the financing implications in greater detail, but the combination of attractive charter coverage, competitive financing and prompt delivery positions materially strengthens the expected return profile of these investments. I will now pass the call to Stavros for a review of our financial performance, balance sheet highlights and financing framework supporting our fleet renewal program. Stavros, please go ahead.

Thank you, Stamatios, and welcome to everyone joining today's call. Let's begin with Slide 7. I will review our financial performance for the second quarter and first half of 2026, followed by an update on liquidity, leverage and growth funding. As Stamatios highlighted, the second quarter and the first half of 2026 marked the strongest financial performance in Seanergy's recent history. These results reflect the favorable Capesize market environment, disciplined commercial execution and the operating leverage of our pure-play platform. For the second quarter of 2026, net revenues increased to $55.7 million from $37.5 million in the prior year period. Adjusted EBITDA more than doubled to $41.5 million, while net income and adjusted net income reached $26.2 million and $28.5 million, respectively. GAAP EPS was $1.21 and adjusted EPS was $1.32. Our fleet achieved a daily TCE of $32,400, representing a 63% year-over-year increase. This strong momentum extended into our first half results. Net revenues reached $97.8 million, while adjusted EBITDA increased by 165% year-over-year to $69.6 million. We reported net income of $35.9 million and adjusted net income of $42 million compared to losses in the prior year period. GAAP EPS was $1.67, while adjusted EPS reached $1.96. Turning to our balance sheet. We ended the quarter with $59.5 million of cash and restricted cash equivalent to approximately $3.3 million per operating vessel. This liquidity position was maintained despite investing approximately $73 million in newbuilding installments and fleet renewal initiatives during the first half of the year, while remaining consistent on the dividend front. At the same time, our debt-to-capital ratio remained below 50% maintaining prudent leverage while executing the largest investment program in our history demonstrates the good standing of our balance sheet and provides the flexibility required to complete our fleet renewal program. Now turning to Slide 8. We will highlight the quality of our earnings and the resulting strength of our cash flow generation. Our fleet achieved a daily TCE of $28,244 during the first half of 2026, increased by 69% year-over-year. Our index-linked exposure allowed us to participate directly in market strength, while selective fixed rate conversions helped to manage volatility and improve earnings visibility. Now the adjusted EBITDA at $69.6 million represents a margin of approximately 70%, while operating cash flow margin was approximately 44% -- these figures demonstrate the efficiency with which revenues convert into operating cash flow. Adjusted EPS of $1.32 for the second quarter and $1.96 for the first half of the year provides strong coverage for the quarterly dividend while supporting the continued funding of our fleet renewal program. Turning to Slide 9, which summarizes our leverage position and the financing framework supporting our fleet renewal program. As of June 30, 2026, total debt, including finance lease liabilities, stood at approximately $299 million, corresponding to a fleet loan-to-value ratio of approximately 42% based on independent broker valuations. Debt per vessel was approximately $15.7 million compared to an average fleet market value of approximately $37.3 million per vessel, highlighting substantial embedded equity across our fleet. The estimated scrap value of our fleet covers approximately 70% of our outstanding debt, providing downside asset coverage. Now at the same time, our weighted average financing margin declined to approximately 2.17%, reflecting the strength of our lender relationships and consistent access to competitive financing. Subsequent to quarter end, we completed our inaugural $100 million unsecured corporate bond offering in Greece. The transaction represents an important enhancement of our capital structure. As Stamatios mentioned earlier, the non-amortizing nature is particularly well suited to our newbuilding program, preserving liquidity during the construction and aligning principal repayment with the future cash generation of the new vessels. Now the bond further diversified our financing sources beyond traditional secured bank financing and finance leases and provides financial flexibility as we execute the program. Needless to say that the all-in cost of 4.9% per annum is extremely attractive given the unsecured nature of the financing. In parallel, we have secured approximately $296.5 million of committed bilateral financing facilities for our newbuilding program with unique characteristics that immunize the financing amounts against adverse movements in the market value of the vessels. Together with the bond proceeds and existing liquidity, these sources cover approximately 90% of the program's remaining CapEx. Building on the previous slide, turning now to Slide #10, we provide a clearer view of the funding position and payment profile of our fleet renewal program. To date, we have already invested approximately $73 million from our own funds. This is equity participation in the program. Against the remaining installments of approximately $518 million, we have secured $296.5 million of committed bilateral pre- and post-delivery financing, while the recently issued EUR 100 million unsecured bond equivalent to approximately $114 million provides an additional pool of flexible non-amortizing capital. We also have approximately $59.5 million of cash and restricted cash as of June 30, 2026. For the remaining unfunded portion, we have assumed debt capacity, meaning 60% loan-to-value on the market value of the not yet financed vessels of approximately $126 million. On that basis, the entire remaining investment program is prudently covered with additional funding capacity relative to the scheduled installments. The chart on the right also highlights the staggered nature of the capital commitments. Payments are distributed through the first half of 2029 with the largest installments aligned with [ the then ] vessel deliveries. This gives us ample time to arrange the remaining vessel-specific financing. I would also connect the funding profile to the charter agreements Stamatios described earlier. The 3 2027 newbuildings will enter service under 4- to 5-year contracts with [ floor ] rates expected to cover the vessel breakevens. This establishes a contracted base of cash generation during the initial years of operation and strengthens the debt service profile of the vessels. At the same time, the commercial structures preserve meaningful earnings upside. Now from a financing and capital allocation perspective, these agreements materially improve the quality and visibility of the cash flow supporting the investment program. They reduced downside risk during the early amortization period, enhance the expected risk-adjusted returns of the vessels and further derisk the execution of the first phase of our fleet renewal strategy. In summary, the principal funding sources are substantially secured. The remaining capital commitments are staggered and 3 2027 deliveries now have multiyear commercial coverage at levels expected to protect their cash breakevens. Together, these factors provide clear funding and cash flow visibility through the initial phase of our program. Finally, let's turn to Slide 11, which illustrates the operating leverage embedded in our platform under different Capesize rate scenarios. Under the current FFA scenario, our model indicates full year 2026 EBITDA of approximately $138 million, while a stronger market scenario will generate further material upside. As freight rates improve, a significant portion of incremental revenue flows through to EBITDA and cash flow, enhancing our capacity to provide shareholder returns while funding the modernization of our fleet. Importantly, approximately 55% of our second half days are already fixed at attractive rates, providing meaningful protection under more moderate market scenarios. I will now turn the call back to Stamatios for a discussion of the Capesize market outlook and broader industry fundamentals. Stamatios, please go ahead.

Thank you, Stavros. The Capesize market remained strong throughout the second quarter of 2026 with the BCI averaging approximately $36,300 per day, bringing the first half average to approximately $29,600 a day. The strong trend has clearly carried over to the third quarter of the year with July BCI average being close to $35,000. Asset values responded accordingly with brokers reporting that secondhand Capesize prices increased by approximately 16% during the first half of the year. Effective vessel supply remains constrained by a combination of slower sailing speeds, elevated bunker prices due to the war and an active dry dock schedule, all of which reduced available capacity while cargo volumes remain very healthy. Although geopolitical developments continue to create uncertainty, the underlying demand picture has so far remained very resilient. Having said this, let us please turn to next slide to take a closer look at Capesize demand. Iron ore. China's iron ore imports increased by 6.3% year-over-year in the first 6 months of 2026, while June, in particular, setting a new monthly record. Demand for high-quality imported iron ore remains high with policies focusing on capacity normalization and environmental efficiency. At the same time, Simandou continues to ramp up, while Vale has reaffirmed its production guidance for the year. Together with the continued production outlook from Rio Tinto and BHP, these developments support a favorable long-term demand outlook for Capesize vessels. Increasing Atlantic Basin exports are expected to enhance ton-mile demand because of the longer sailing distances involved. Bauxite. Turning to bauxite. This trade continues to be one of the strongest structural growth drivers for the Capesize market. China's imports rose by 18% in the January to May period, reflecting continued growth in the use of imported bauxite in China's alumina smelters. Short-term uncertainty about Guinean bauxite export policy may create some volatility, but we remain optimistic about cargo volume in the second half of 2026 based on the sound demand drivers. Coal. Finally, coal trade has remained resilient despite expectations of a structural decline in the recent years. Energy security continues to be a priority across many regions, while warm weather has supported summer electricity demand. Looking ahead, uncertainty surrounding natural gas inventories ahead of the winter could provide additional support for thermal coal demand. Chinese coal imports increased during the first half of the year, and we expect import demand to remain healthy during the second half, supported by relatively slower domestic production and the potential easing of export restrictions in Indonesia. More broadly, global coal loadings have also continued to increase, while evolving trade patterns may contribute to longer sailing distances and additional fleet inefficiencies, both of which are supportive of the dry bulk shipping. Overall, as we enter the seasonally stronger second half, the demand outlook for Capesize market remains constructive across our 3 core cargoes. Turning to the next slide now in order to look at the Capesize supply before concluding our prepared remarks and handing over the call for questions. Looking at the supply side, the backdrop remains very positive for the balance of 2026 as the headline fleet growth of 2.4% likely overstates actual effective supply growth due to several factors. Firstly, about 1 out of every 5 Cape vessels on the water today was built between 2010 and 2012. It means that roughly 20% of the world fleet goes through dry docking surveys in 2026 and 2027. As we'll be renewing our fleet, many owners will need to decide whether to spend more money on 15-year-old tonnage for dry docks. Secondly, geopolitical disruptions and the aging of the world fleet have increased slow steaming, further limiting available vessels. While we wish that the geopolitical situation improves soon, fleet aging amidst stricter environmental regulations is a longer-term story that is likely to continue in the same direction over the next years. As a result, we expect that the effective fleet growth will, in fact, continue to be slower than what is suggested by anticipated vessel deliveries, which even in its nominal form remains quite low compared to other sectors of shipping. Longer term, the low order book compared to the fast rate of vessel aging suggests that by 2030, almost 1 out of every 4 Capesizes on the water will be older than 20 years, even after accounting for newbuilding deliveries. Limited shipyard availability further restricts future supply, supporting a constructive outlook. The Capesize market remains very strong for the next years. And as mentioned earlier in the call, Seanergy maintains downside protection for 2026 and a percentage of 2027 at highly profitable daily rates, which we believe places us in a very good position to navigate the future. Conclusion. To conclude, Seanergy enters the remainder of 2026 from a position of strength, supported by record earnings, meaningful forward visibility, disciplined capital allocation and a modernizing fleet. We are delivering record earnings, a 75% dividend increase with 19 straight quarters of cash distributions. In addition, $591 million committed to modern ships, majority already funded and the 2027s mostly chartered. We are focused on the strongest asset class in a prudent and highly rewarding manner. On this note, I would like to turn the call over to the operator to take any questions you may have. Operator, please take the call. Thank you.

[Operator Instructions] Our first question comes from the line of Liam Burke from B. Riley Securities.

Stamatios, Stavros, how are you today?

Morning, Liam. Very nice to hear from you. Thank you. Everything is fine. I hope the same with you.

It is. Good to hear from you, too. Stavros laid out a capital source with debt as you look at your funding requirements for the new build. But when I factor in your cash flows and what looks to be a sustainably elevated rate environment, I can't help but think that there could be a lot more cash equity put into the new builds? Or would you prefer to continue to use leverage and then use that cash for dividend or further increasing your fleet growth?

Well, that's kind of obvious. Yes, we're not factoring in for the increased cash flow coming in from operations. This is on an as-is basis without factoring in positive cash flows and goes without saying that it's going to be for contingency purposes. We're just going to remain and maintain a conservative approach. Our capital allocation is pretty much evident now that we increased the dividend. We, of course, have room to increase it further in the following quarters once we have visibility for 12 months forward later in November when we announce Q3. But for the time being, we like the fact that we're very comfortable with the current order book that we have. Maybe we do a couple more. And then we will continue rewarding our shareholders, which is our top, top priority, as you can see here.

Okay. And on the supply side, I mean, you pointed out the number of vessels at a certain age. The supply side of the Capesize story seems to be driving a lot of leverage where demand is inordinately high this year, but sustainable. We're looking at a multiyear up cycle in terms of sustainability of rates based on -- just the tight supply of Capesize vessels. Is that the way -- right way to think about it beyond '26?

That's an excellent way to think about it. Yes, of course. While we have visibility until the first half of 2030, we can see that there is limited order book coming in. And at the same time, we have a very aging fleet, which gets older and older and the survey requirements will get more and more steeper and demanding. So for the time being, we are very, very conservative. We will, of course, revisit this approach in the following years once we have the ability to see how that order book develops post 2030. But what can I say here is that the Capesize order book appears to be the lowest amongst many, many other vessel types, not just the dry bulk, which, of course, is the lowest. But if you look at tankers, containers, LNGs and all that, we're doing about 40% to 50% order book versus the current fleet. Capesize is a mere 12% to 15% if at all, and you have a very aging fleet. So there's no comparison into the fundamentals of the Capesize segment in the following years.

We're going to take our next question. Your next question comes from the line of Tate Sullivan from Maxim Group.

Congratulations on the EUR 100 million bond offering, and I see it's trading above par here, too, and you mentioned 2x oversubscribed. I should you -- can you go with that back to that market right away? Or are there other offsetting considerations to make you return for another bond offering there? Please, to start.

Again, great to hear from you. We feel very happy with the level of funds we have raised in the Greek market, given the strong support and the fact that we have a very good performance of the bond trading there after the initial offering. We are not looking for anything additional right now. We might consider some other solutions in the Greek market. but nothing imminent in the next, let's say, 6 months to a year. We will remain in a very comfortable cash flow position coming from operations as well as the cash buffers of the company -- [ coffers ] of the company, which are at excellent levels and very happy to fund the existing investment program. So, so far, we're very content and we're just going to remain still for the time being, maybe add a couple of additional quality and selective potential acquisitions in Q3 and Q4, but we will see about that in the next months.