Top Ships Inc (TOPS) 2009 Q1 法說會逐字稿

Greetings and welcome to the TOP Ships First Quarter 2009 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Michael Mason of Allen & Caron.

Thanks, Jackie. Good morning and welcome to TOP Ships Results Conference Call for the first quarter 2009. I am Michael Mason of Allen & Caron Investor Relations. Before we start the call, there are a couple of items I would like to cover.

Many of you received the press release announcing the Company's results for its first quarter 2009. It was released this morning at 9.00 a.m. Eastern Time. If you did not receive the copy of the press release, it is posted in the clients section of our website at www.allencaron.com or you may call our office in New York at 212-691-8087 and we will e-mail it to you right away. It is also posted on Yahoo! Finance.

This call is being broadcast live over the internet at www.topships.org or Precision IR's webcast site at www.investorcalendar.com. The internet replay will be available shortly after the end of the call, and will continue for seven days. In addition to telephonic replay, the conference call will be available for seven days by calling 877-660-6853 from the US and Canada, or 201-612-7415 from outside the US or Canada, and our account number 286, and conference ID number 324783.

I would now like to turn the call over to Mr. Thomas Jackson, Chairman of the Board of Directors at TOP Ships. Good morning, Mr. Jackson.

Good morning Michael, thank you. Good morning ladies and gentlemen. I am Tom Jackson, the Chairman of the Board of Directors of TOP Ships Inc. It's my great pleasure to welcome you to TOP Ships Earnings Conference Call in respect to first quarter 2009 results.

Before we begin, let me draw your attention to the fact that during the conference call, we might make certain forward-looking statements about the Company's future expectations, including future revenues and earnings. Those statements and all those statements here today, other than historical facts, are forward-looking statements within the meaning of section 27A of the Securities Act of 1933, section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation Reform Act of 1995.

Such forward-looking statements involve risks and uncertainties, and are subject to change at any time, and the Company's actual results could differ materially from expected results. The Company undertakes no obligation to publicly update forward-looking statements to reflect subsequently occurring events or circumstances.

The audit committee have reviewed and recommended to the Board the exceptions to the accounts for the first quarter 2009 as presented. And the Board of Directors has approved the accounts as presented. With me today for our conference call are Mr. Evangelos Pistiolis, President and Chief Executive Officer, and Mr. Alexandros Tsirikos, Chief Financial Officer.

Mr. Pistiolis will provide you with details of TOP Ships' operation, activities and general expectations. Mr. Tsirikos will comment on the financial results of TOP Ships Inc. for the quarter ended March 31st, 2009. Following the financial highlights, the call will move into a Q&A session.

I would now like to pass you over to Mr. Evangelos Pistiolis.

Thank you, Tom. Good morning, ladies and gentlemen. For the three months ended March 31st, 2009, we reported net income of $1.370 million or $0.05 per share basic and diluted compared with the net loss of $18.841 million or $0.93 per share for the first quarter of 2008.

For the three months ended March 31st, 2009, operating income was $2.357 million compared with operating loss of $2.434 million for the first quarter of 2008. Revenues for the first quarter 2009 were $29.793 million compared to $72.637 million recorded in the first quarter 2008.

We are happy to report one more profitable quarter in a very challenging economic environment. Some of the most important developments that have taken place until today are the following. As of March 31st, 2009, we were not in compliance with certain loan covenants under our loan agreements.

We have received or agreed to receive waivers on covenant breaches until March 31st, 2010 from four out of five banks representing approximately 85% of our total indebtedness. We took delivery of five out of six of our newbuilding product tankers. Our final newbuilding is scheduled to be delivered during the second quarter of 2009.

In April 2009, we agreed with the owners of the M/T Relentless to terminate the bareboat charter. Under this agreement, during the third quarter of 2009, we will redeliver the M/T Relentless to its owners and pay a termination fee of $2.5 million. The bareboat charter would have expired in 2012.

I now would like to pass you over to Alexander, who will take you through the financials.

Thank you, Evangelos. Good morning, ladies and gentlemen. For the three months ended March 31st, 2009, the Company reported net income of $1.4 million or $0.05 per share basic and diluted compared with net loss of $18.8 million or $0.93 per share for the first quarter of 2008.

For the three months ended March 31st, 2009, our operating income was $2.4 million compared with operating loss of $2.4 million for the first quarter of 2008. Revenues for the first quarter of 2009 were $29.8 million compared to $72.6 million recorded in the first quarter of 2008.

Fleet Report. As of March 31st, 2009, our fleet consisted of 16 vessels or 0.9 million deadweight, including 11 owned and five vessels sold and leased back, as compared to 23 vessels or 2.1 million deadweight on March 31st, 2008, which figure included 12 owned, one under capital lease and 10 vessels sold and leased back.

During the first five months of 2009, we took delivery of five vessels, namely Miss Marilena, Lichtenstein, Ionian Wave, Tyrrhenian Wave and Britto from SPP Plant & Shipbuilding Company of the Republic of Korea. All vessels have entered into bareboat employment for a period of seven to 10 years at an average daily rate of approximately $14,400.

Liquidity and Capital Resources. As of March 31st, we had total indebtedness under senior secured credit facilities of $398.3 million with our lenders, the Royal Bank of Scotland, HSH Nordbank, DVB Bank, Alpha Bank and Emporiki Bank, all these loans maturing from 2013 through 2019. Our non-restricted cash as of March 31st, 2009 was $13.3 million.

Loan Covenants and Discussions with Banks. As of March 31st, 2009, we were not in compliance with certain of our loan covenants. As of today, we have received certain waivers on these covenant breaches until March 31st, 2010 from HSH Nordbank and Alpha Bank, which represent approximately 54.6% of total indebtedness specifically.

In the case of HSH Nordbank, we have entered into amendatory agreements under our two financing agreements. These amendatory agreements mainly provide for waiver regarding financial covenants through March 31st, 2010, except for adjusted net worth, for which a waiver has not been received yet. Second, the waiver for asset coverage covenants through March 31st, 2010. Third, an increased applicable margin, fourth, an amendment fee, and fifth, cross collateralization of the two facilities.

In the case of Alpha Bank, we have entered into amendatory agreements under our two financial agreements, which provide for, first, a waiver regarding financial and asset coverage covenants through March 31st, 2010. Second, an increased applicable margin, and third, cross collateralization of the two facilities. In addition, we have agreed with DVB and Emporiki Bank to receive waivers until March 31st, 2010. These two banks are representing approximately 30.6% of total indebtedness.

The agreements are preliminary and are subject to execution of definitive documents, where certain terms of the existing financing agreements will be amended similarly to the other two banks. Finally, we are in discussions with RBS in order to receive waivers until March 31st, 2010. The outcome of this discussion remains unknown.

Now, I'll pass you over back to Tom.

Thank you, Alexandros. I would now like to pass the call back to the operator for the Q&A session.

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. (Operator Instructions).

Thank you. Our first question is coming from Helane Becker of Jesup & Lamont.

Hello, thank you very much, operator, for taking my call. (inaudible - technical difficulty), gentlemen. So, this is my question, just so I understand, on about 85% of your debt, you've got waivers to March of 2010. And I'm just a little confused about the other 15%. And what happens -- where are you, where do you stand on the process with that, number one, and number two, what if this group doesn't grant waivers?

Yes, hi, this is Evangelos. The way it's structured is, really, I don't necessarily think that we need those waivers, but we have started negotiating with the remaining 15% a long time ago. It's a matter of the cost I would say, and we're trying to get the best for the Company. Even if we don't come to an agreement, I don't see a problem with that. It's just a matter of accounting where we're going to be -- we're going to put the loan as current.

Okay, alright. So, there is no danger that any of these lenders can force you into any kind of a liquidation mode to get their money back?

Theoretically, everything is possible in life, but practically with a company that is underway and everything is going smoothly as far as we know, and as far as we can tell, I would call that almost an impossible thing to happen.

Okay, thank you. That was it.

Okay, thanks.

(Operator Instructions).

Our next question comes from Paul Bornstein of Black Diamond Equipment Limited.

Yes, hi, just had two questions. And maybe you can give us an outlook on the rates we're going -- what you see in the marketplace, and in terms of a rebound? And secondarily, since you've levered up the Company significantly, and obviously the market collapsed on you, just curious what kind of expense controls you've put on, on the corporate side including salary reductions and anything else?

Yes, on the first question, it's of course hard to tell, but with looks of things, we're going to be looking at at least one or two years of not so great markets. We have seen the drybulk being very low, but then recovering, then going down again, and now recovering again. So, I think it's going to be -- it's not going to be a great market, but it's not going to be a catastrophic market as well, if you look at the average, right? So, you see a little volatility as well there.

Now, that's on the dry side. On the wet side, I think that 2010 will be the year when we'll start looking at better rates again. It's not going to look rosy for the remaining of 2009, but 2010 mainly due to the phase out, I think that things will start slowly, slowly recovering. So, that's more or less what we see here happening and going forward.

And of course, for both markets, it's -- for both sectors of industry, it has a lot to do with how many ships will be cancelled, right, because you know that the orders book is quite heavy. So, I think that the -- that will also depend on the number of the tankers or ships being cancelled and not being built.

On the second part, I think we have positioned ourselves to be, at least from the little companies, one of the less hit from the economical crisis. That's mainly due to the fact that we have sold a lot of ships at the beginning of 2008 expecting some kind of a downturn. We didn't expect, of course, the world to collapse, but we did expect that the shipping will be coming in more rough quarters if you want.

So, I think we are in a better position than most of the others. Now, as far as the cost control is concerned, we are closing and eliminating as much as we can. We have a reduced staff, not reduced salaries. We have reduced staff quite a bit. I think it's about 35% reduction of the staff up to now, and they're working very hard on expenses from anything, from electricity bills down to anything really. And we have reduced our G&A, if you look at the numbers, quite a bit. And we're working on even reducing that further within this year.

Okay, then you guys won't get any bonuses when the market normalizes, as you've taken your same salaries for the last couple of years, even with the downturn, and shareholders have already lost money if they bought it a year ago.

Yes, well the collapse of the world is not necessarily the Company's fault, as you know.

No, no, I'm not taking offence to you. Don't take it offensively, but the energy companies, many of the senior executives have cut their salaries, because they have no control over commodity prices up or down, and the same thing on the shipping side of the equation. So, that's why I was asking because that's what I see in my other company.

Sure. I can answer the question. The -- like I said before, nobody has taken a cut in the salary here. If you look at our Company's quarterly results, you'll see that we have turned around the Company just at the right timing, as an impeccable, I would call it, timing. We have now three quarters profitable in one of the most difficult markets, maybe ever. So, like I said, we're looking at ways to cut expenses, but it's also, don't forget, very competitive, the tough market here in Greece, because half of the world's fleet are being managed out of this town.

So, it's very competitive. So, we have not taken -- the answer is no, we've not taken any salary cut. And as far as your question on the bonus side is, really the bonus is something that the Board has the saying on it. It has nothing to do with me either, the CFO. And as you probably have seen, we have not got any bonus since 2006, if I remember well. So, I think that shows something.

Okay, and so it seems like you're preparing to get some leverage. You've done a good job to cut the losses, and now you're profitable. Hopefully, that will continue. And then, obviously I mean, I can see huge leverage on the upside when the market gets a little better.

That's what we're looking forward to.

Okay, hopefully we'll see.

Okay.

Thank you. There are no further questions at this time; I'd like to hand the floor back over to management for any closing comments.

Thank you, operator. That completes the Q&A session for today. Thank you, ladies and gentlemen for participating in this call. We look forward to talking to you again, and sharing our continuing progress on the next quarterly conference call. Thank you and have a good day. Ladies and gentlemen, you may now disconnect your lines.

This concludes today's teleconference. Thank you for your participation.