Top Ships Inc (TOPS) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2010 TOP Ships earnings conference call. My name is Talithia and I will be your coordinator for today.

At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of today's conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.

Before we begin let me draw your attention to the fact that during today's conference call we might make certain forward-looking statements about the Company's future expectations, including future revenues and earnings. Those statements and all other statements here today other than historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21 E 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 risk and uncertainties and are subject to change at any time. 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 has reviewed and recommended to the Board the acception of accounts for the third quarter and nine months ended September 30, 2010, as presented and the Board of Directors has approved the accounts as presented.

I now like to turn the presentation over to your host for today's conference, Mr. Alexandros Tsirikos, Chief Financial Officer of TOP Ships. Please proceed.

Good morning, ladies and gentlemen. I would like to start by reading Mr. Pistiolis, Chief Executive Officer of TOP Ships, comments for this quarter's results.

We are happy to report one more profitable quarter in 2010, which is the result of a combination of a strong chartered portfolio together with the implementation of our cost-cutting initiatives. We are also happy to report that we have concluded the sale of motored-tanker Dauntless for $20 million. The sale has resulted in a gain of approximately $5 million which will be included in the results of the fourth quarter.

I would like now to that into more detail, to go over the financial results for the quarter. For the three months ended September 30, 2010, the Company reported a net income of $1.1 million or $0.03 per share and operating income of $6.6 million on revenues of $23.3 million. For the nine months ended September 30 the Company reported a net income of $0.2 million or $0.01 per share on operating income of $16.1 million and revenues of $68.3 million.

In relation to our financial indebtedness, as of September 30, 2010, we had total indebtedness under senior secured and unsecured credit facility with our lenders of $371.2 million with maturity dates from 2010 through 2019.

In relation to loan covenants and discussions with banks, as of September 30, 2010, we were in breach of loan covenants relating to earnings before interest, taxes, depreciation and amortization, overall cash position, adjusted net worth, and asset cover with certain banks. As a result of these covenant breaches with certain banks, we have classified all of our debt and financial instruments as current.

The amount of long-term debt and financial instruments that has been reclassified and presented together with current liabilities amounts to $328.7 million and $10.4 million, respectively. Now in relation to all these covenant breaches we have been in discussions with all of our banks. As of the date of this release we have obtained waivers from Emporiki Bank for all covenant breaches until June 30, 2011, and from DVB Bank until December 31, 2010.

Now I would like to pass the call back to operator to open it up for any questions that there might be.

(Operator Instructions) Adam Fleck, MorningStar.

Good morning, Alexandros.

Hello, Adam.

I have a couple of questions here. Let's start with the sale of the Dauntless, the $20 million sale. Should we assume that that is going all go towards the debt pay down? I saw you broke out the $19.5 million that is associated with that ship.

That is correct. All the proceeds have been used to pay down debt.

Okay, great.

Because they are also -- don't forget, there are commissions involved, so that is why the $19.5 million.

Right, right. And then this new tanker that you are bringing into the fleet it's actually quite old. I guess what is the appetite for the market right now for a ship of that age as you go out into the spot market?

It's actually an anticipation and expectation that the product tanker will eventually -- the product tanker market will eventually pick up. It's a vessel which, indeed, is old but it has undergone significant dry docking work which we have been monitoring and which I feel -- we know that it has gone through a lot of work.

It also has some very good trading characteristics. It's ice class and it also has some very good other technical characteristics that we believe when the market picks up we will be able to benefit from it. Also, we have a very good charter-in rate. Don't forget that a year ago we had similar vessels that we were chartering in at three times that price.

Sure, good point. What drove the decision to bring another chartered-in vessel? You obviously had exited all of those, like you said, a year ago or so.

That is correct and it's more -- I would say it's more of an opportunistic decision, because on the one hand we had already decided that we would be proceeding with the sale of the Dauntless and at the same time we found that deal which we believe it makes sense due to the fact that we have a very low charter-in rate.

So I would say it's opportunistic and we hope that we will be able to make good returns when the market comes back, which we hope it does so soon.

Sure. You are talking again about the market. I see Ioannis P is also on the spot market now as it comes off a charter.

The Ioannis P is actually in spot market. This is the first day that the vessel is in the spot market.

Okay. So is the plan eventually to get back to the charter market with that ship?

For the time being we have not got any indication that a long-term charter for that ship -- we didn't find any interesting deals in order to do a longer-term charter. And on the other hand, since we are expecting that the market will pick up it would make sense to keep it spot for some time and see how the market picks up and if it picks up, because that is how we are going to benefit from the higher rates.

Okay, fair enough. Is there a timeframe in mind if the market -- you talked about your expectation for the market to pick up. Is there a time frame? Is it six months out, nine months out where you say the market hasn't picked up we need to book this ship or sell this ship? What is the timeframe on that?

First of all, don't forget that traditionally Q4 we have seen the cyclicality. Cyclicality yet has not yet picked up in the product tanker market.

Most likely, we might be experiencing maybe a shift in cyclicality and it would make sense to wait at least for December, January, and even February to see whether we will be experiencing that cyclicality. And then -- at least for a couple, two to three months and then review the situation again and market conditions and then make up our minds.

Okay, great. One last one here on the Ionian Wave and the Tyrrhenian Wave. You are still receiving it looks like reduced charter amounts there. It has been coming up on close to a year that that charter has been paying less than the contracted amount.

I am just curious where we stand there and going forward if those negotiations continue and again any time frame on that.

First of all, we are getting the diminished amount as we have said before, the $10,000 per day which -- don't forget again that it's still way above the market. Yes, we have been -- accumulated and unpaid amounts which we are still reviewing our legal options and so I really don't have anything more to say at this point.

But don't forget that when you have a market which is depressed I am not sure whether it's going to be easy to actually go and claim that amount from somebody who has these vessels on charter because you know that they are not making tons of money out of it. So we have not lost our right on these amounts so we can still wait for the market to come back and then see how we are going to handle it.

Okay, great. Well, I appreciate the time. Thanks a lot.

Thank you very much. Bye-bye.

[Pedros Calagas], [Delos Investments].

My question regards the new product -- well, not to the new but the newly added product tanker which you chartered in. Could you give us the charter-in rate and for how long it's chartered in for?

It has been chartered in for five years and the average rate is $5,219.

Okay, thank you very much.

Sir, there are no further questions at this time.

Okay. I guess this completes our call. Thank you very much everyone for being on the call and have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.