Top Ships Inc (TOPS) 2010 Q4 法說會逐字稿

Thank you for standing by, ladies and gentlemen. Welcome to the TOP Ships conference call on the fourth-quarter and year-end at 2010 financial results. We have with us Mr. Alexandros Tsirikos, CFO of the Company.

At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions). I must advise you that this conference is being recorded today, Friday, March 18, 2011.

Before we begin, let me draw your attention to the fact, during the conference call, we might make certain forward-looking statements about the Company's future and expectations, including future revenues and earnings. These statements and all other statements heard today other than historical facts are forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, Section 21-E of the Securities Exchange Act of 1934. (inaudible) is defined in the Private Securities Litigation Reform Act 1995. Such forward-looking statements involve risks and uncertainties and are subject to change 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.

We now pass the floor to one of your speakers today, Mr. Tsirikos. Please go ahead sir.

Good morning, ladies and gentlemen.

For the three months ended December 31, 2010, the Company reported a net income of $2.3 million or $0.07 per share, and operating income of $6.1 million and revenues of $22.6 million. For the year ended December 31, 2010, the Company reported a net income of $2.5 million or $0.08 per share, and operating income of $22.3 million and revenues of $91 million.

Our CEO, Evangelos Pistiolis, commented "We are happy to report one more profitable quarter in 2010, as well as a profitable year." During 2010, we repaid $64.6 million of debt using funds generated from operations. This was made possible due to well-timed strategic move (inaudible) is going to be amended during 2008, 2009 and we will (inaudible) investment charges as well as [new terminations].

[By virtue of] timing, we once again demonstrated from the sale of [M/T] Dauntless which we managed to fetch $20.1 million which we believe is a very fair price. Sorry, I would like to correct -- $64.6 million was repaid using mainly funds from operations and the proceeds from the sale of Dauntless.

Looking into the future, we anticipate that 2011 will be challenging for the shipping industry, particularly the [gerbil] sector, due to the issue (inaudible) supply be effective with (inaudible).

Outstanding investments. As of December 31, 2010, we had total investments on senior secured and unsecured credit facilities with our lenders of $300 million -- $343 million -- $343.7 million. Excluding unamortized deferred financing fees of $4 million and unamortized debt [discount of $2.3 million] with a maturity date from 2011 through 2019.

Loan covenants and discussions with banks -- as of December 31, 2010, we will embrace a loan covenant relating to earnings before interest, taxes, depreciation and amortization. Overall capitalization adjusted net worth and asset (inaudible) in [seven] months. As a result of this (inaudible) provisions contained in all our bank facilities, we will embrace (inaudible) loan facilities and have classified all our debt and financial instruments as [carried]. As of this date, we are in discussion with all of our banks (inaudible) covenants (inaudible). We extended our (inaudible) payment of our loans before their maturity, provided that we pay loan installments (inaudible) related dollar (inaudible) as if we do under the existing credit facilities.

In relation to (inaudible) investment company (inaudible) we now confirm that will be treated [as a basic] for 2010 and the (inaudible) we provide all the necessary information in order to allow US shareholders to make and maintain a QEF election, and we post such information on our website, www.TOPShips.org.

I would like to past the floor now back to the operator for any questions there might be. Thank you very much.

(Operator Instructions). Adam Fleck, MorningStar.

Good morning. I just had a few questions here. First on the debt pay down, obviously you guys paid down quite a bit throughout 2010. Where do we stand now for 2011 with the installment payments and the recorded principal payments?

For 2011, we meet -- we have already done some work. We look to do some work in order to be able to meet all the payments. (multiple speakers)

Would it primarily be on the bridge loan that you need to do some work or what's the (multiple speakers) right now?

We have already been trying. We've been discussing with all of our lenders and also to be able to do some type also a rescheduled maintenance so that we can alleviate (inaudible) 2011. Because in 2011, our revenue, the main shift if you want on our 2011 revenue is the fact that Cyclades, which is one of our dry vessels and it's one of the major cash flow creators in the Company, enters into a much lower charter rate, has been redelivered to its new charter rates in the coming weeks. So this will affect significantly our 2010 -- our 2011 revenues.

Also, we have another vessel which is being redelivered in the summer of 2011. That will be Astrale, but we are not sure at what rate that is going to be chartered. Therefore at this point, in order to be prudent, we are trying to generate and strengthen cushion (inaudible) if you want in terms of the cost flow of the Company. This is the reason why we are currently in discussion with (inaudible) as well as all our financiers.

Moving on to the P&L, the SG&A costs came in quite a bit higher than we were expecting, even when you back out the stock-based compensation. Do you have a budgeted amount, say, for a daily SG&A cost you expect for 2011?

Actually, no, we do not have a daily budget because it doesn't work on a daily basis. It is actually, it's a fixed cost, which we managed to a certain extent at least to convert it into a variable cost by taking part of it out and making it -- and having the management fees. So I believe the fixed portion of the G&A will remain the same, and we'll try to have some savings, but at this point, I wouldn't say that we will have (inaudible) for 2011 (multiple speakers).

So that is -- is it a different opinion then than what we talked about the last couple quarters? I know you were looking for $1 million to $2 million in savings on the SG&A line.

Well, if you take a look right now, we have actually achieved that on a year-around basis, because if you compare the G&A of 2009 with the G&A of this year together with the management team (inaudible), you already have a $2.1 million saving. So I would say yes, we have achieved what we had said, but we're going to have to say we're going to have to wait to see and then we're going to have a full year of management outsourcing because [before] we are able evaluate full-year savings, if you want.

I guess my concern was more also on the quarterly level. It just ticked up so strong from the third quarter. Can you maybe provide some color on what happened there on SG&A line? Even again backing out stock comp and management fees?

In general, the fourth quarter, there are some bonuses, there is some supplementation, and usually in Q4, if you also look at the previous years, you'll see that there is always a jump from one year to the other.

Now, additionally, the reason why G&A has also jumped, there is another [atrium] there which (inaudible) [$105,000] of our roughly $650,000, which relates to a write-off of [office] improvements because due to the fact that we have streamed down operations, we are leaving a certain part of the building that we are (inaudible) part of the (inaudible) that we are occupying. Therefore, we took a direct hit on our P&L due to the write-off. So if you were to say Q4 you're going to need to take out depreciation of around $650,000, it would be normalized to $4.8 million, so that would be the figure that you need to have in mind, again even down from the previous quarter, but this has been historically be the case.

Okay. What about on the -- I know you said you don't do a daily SG&A budget due to the variable nature. What about on operating expense side, the (inaudible) operating expenses?

On the operating expenses, we expect that for the -- as far as (inaudible) are concerned. We are budgeting somewhere between around $7000 for the [amount]. On the dry side, we are looking at around -- for the Panamaxes, we're looking around $6000. For our Handy, we are still looking at $5500 as a budgeted (inaudible) figure. Just to give you an idea, in Q4, we did better than the budgeted in all the dry ones, but we did worse than the budgeted figure on the (inaudible) side. So these in a sense kind of counterbalance each other, but these are the figures that we are using to budget.

Great, thanks. That's helpful. Then finally, I know again last quarter we talked about that Ioannis P and you had said you'd be looking at it kind of early part of 2011 and see if it's still on the spot market. Rates look like they've come back a little bit, but are we just at a level that you're not comfortable chartering it out yet, or is a vessel sale here still a possibility?

For the time being (inaudible) Ioannis P, first of all I would say that most shipping companies, they show the same. It's always a possibility. Now outside of the Ioannis P, chartering is concerned. It is still operating in the spot market. But the reason [we don't say] that we've not found a medium-term time charter, if you will, (inaudible) at these acceptable levels. This (inaudible) will be the good charter, will be getting $12,000 a day for a medium-term charter, so for the time being, this is not something that is of interest to us. We will continue to stay in the spot market. We have seen that the spot market has picked up in certain (inaudible). Unfortunately, we were not positioned to take advantage of that one. We might [need] down the road in the next week, in the next few months.

So we will always be looking to see (inaudible) find a medium-term charter at an attractive rate, and then we might (inaudible).

Great, I appreciate that.

Thank you very much.

[Ben Stein], Black Diamond.

Yes, obviously the previous caller covered a couple of things, but I'm just very curious on the SG&A. I can't blame you on the economy and the weakness in the rates and what's been happening there. But I kind of would like to see SG&A come down a lot more, given that I'm not sure what management is doing to provide value to our shareholders. Reverse splitting stocks really doesn't count as a way to get -- as a way for improvement. So I'm still not clear, on the SG&A side, why can't management take $1 salary and get paid in stock, like the shareholders have to be involved with the Company? So I'm just not really sure what I am paying management for at this stage of the game.

First of all, I'm not sure what the question is, but let me just start by saying --

The question is the SG&A. Given the economic environment which you have no control over, I don't blame you at all for that. But if I'm waiting for the economy to turn around, I don't need to pay management a lot of money until it turns around. So, I'm just wondering. I think SG&A has to come down a lot more, given the economic environment that we're in, so we can get more to the bottom line for shareholders.

Yes. I believe that, first of all, in order to say, as I said also in the previous quarter, simply it would be better to wait and see until we have completed a full year of the new arrangement (inaudible) management in order to see where our G&A is actually going to end up. That is the first point.

The second point is you mentioned something about the reverse (inaudible) which is something that we have not done. Actually the stock was -- there was a recovery in the stock (inaudible). So I'm not sure what you are --.

You've done it before, but you haven't done it recently.

Yes, yes. No, I thought you were saying that because many people (inaudible). Yes, (multiple speakers)

I mean, you usually don't reverse the stock unless you have positive news coming out because the stock goes back down to where it was. (multiple speakers) in your situation.

Or unless you have to, because the truth of the matter is that, as you very well know, previously our stock price was very depressed, and we had received a notice from NASDAQ. Unfortunately, the stock price is again depressed right now. It is still -- the reversal (inaudible) because there's not much we can do on that front.

(multiple speakers)

(multiple speakers) to dupe the Company to trade under and cannot pay the [lower] restricted, if you want, trading platform, which I don't think is something that shareholders would enjoy. So for the time being, and the stock being where -- the stock price being where it is, reverse stock split, (inaudible) of course.

I understand. Then I'm still not sure what the -- you mentioned the bonuses. I'm not sure what bonuses are paid.

The truth of the matter is --

(multiple speakers) carry on bonuses, because I can't do anything on the economy, but on the management side, all I can look at over a five-year period and see how well the stock has done. That's the only gauge I have.

I appreciate what you're saying. The thing is that the [companies] haven't come down from being a big company to a small company. The morale of the Company has been badly (inaudible) and therefore, to a certain extent, in order to keep the people, the key people that you would like, we have to give out certain bonuses in order to keep them [alive]. Therefore, I would say we had to do that in a sense.

Well, that's your determination to [say] if you need them, you have to have them, but as a shareholder, you have to look at what they have done to increase value for shareholders.

Yes (multiple speakers)

So hopefully you'll outline that in the next call or next quarter for the people you're having on board. What have they done to create value for shareholders? That would really help me out a lot.

Yes.

Okay, so I think that needs to be addressed because that's where some of the money is going.

So I guess you're going to have to wait for some -- to look again in the future quarters to see how we are doing on this one.

(Operator Instructions). There are no further questions at this time. Please continue.

I would like to thank you very much for being on our call. You can -- you may hang up. Thank you very much. Bye-bye.

That does conclude our conference for today. Thank you for participating. You may now disconnect.