Gener8 Maritime Announces 2nd Quarter 2017 Financial Results

gener8

Gener8 Maritime, a leading U.S.-based provider of international seaborne crude oil transportation services, announced its financial results for the three months and six ended June 30, 2017.

Highlights

  • Including a non-cash loss of $67.9 million due to ships held for sale, recorded net loss of $82.5 million, or $0.99 basic and diluted loss per share, for the three months ended June 30, 2017, compared to net income of $38.0 million, or $0.46 basic and diluted earnings per share for the same period in the prior year.
  • Recorded adjusted net loss of $8.9 million, or $0.11 basic and diluted adjusted loss per share, for the three months ended June 30, 2017, compared to adjusted net income of $42.0 million or $0.51 basic and diluted adjusted earnings per share for the same period in the prior year.
  • Increased vessel operating days by 18.0% to 3,352 in the three months ended June 30, 2017 compared to 2,841 in the same period in the prior year.  Increased full fleet “ECO” operating days to 54.2% in the three months ended June 30, 2017, compared to 30.8% in the same period in the prior year.
  • Entered into a series of transactions that are expected to increase cash on the balance sheet by more than $87 million and reduce total indebtedness by approximately $144 million.  These include:
    • Modified the Company’s interest rate swap agreements, resulting in aggregate net cash proceeds of $18.2 million in April 2017.
    • Sold the following vessels for net cash proceeds of $65.4 million after debt repayment of $119.7 million:
      • A 2002-built Aframax (Gener8 Daphne), two 2016-built VLCCs (Gener8 Noble and Gener8 Theseus), and a 2002-built Suezmax (Gener8 Orion).
    • Entered into agreements in July 2017 to sell the following vessels for expected net cash proceeds of $3.4 million after debt repayment of $24.1 million:
      • Two 1999-built Suezmax tankers, Gener8 Horn and Gener8 Phoenix, for demolition prior to the vessels’ special surveys, and the 2002-built Aframax Gener8 Elektra

“We continue to take important steps to strengthen our platform and balance sheet” said Peter Georgiopoulos, Chairman and Chief Executive Officer of Gener8 Maritime. “In this seasonally weaker rate environment, we remain focused on maximizing our financial flexibility in order to manage our business for the near- and long-term.  We continue to dispose of older vessels, streamlining our fleet and focusing on high quality tonnage with the best return profile.  This strengthens our competitive position in the market. We believe the strategy we are pursuing is prudent and reflects our approach to managing our balance sheet and market exposure.”

Leo Vrondissis, Chief Financial Officer, added, “Our balance sheet is expected to be further strengthened during the second quarter, by our agreeing to transactions that are expected to provide over $87.0 million of additional liquidity. The sales of our older vessels have also been timely, as several have come before the vessels’ 2017 special surveys, which according to budgeted amounts will preserve an additional $18 million of liquidity.”

Fleet Performance

The average TCE rates earned by Gener8 Maritime’s vessels are detailed below:

Gener8 Maritime Average Daily TCE Rates(1)

Three Months Ended

Jun-17

Jun-16

VLCC

Average Spot TCE Rate

$26,961

$44,806

Average Time Charter TC Rate

$48,399

SUEZMAX

Average Spot TCE Rate

$15,361

$31,500

Average Time Charter TC Rate

AFRAMAX

Average Spot TCE Rate

$9,858

$20,477

Average Time Charter TC Rate

PANAMAX

Average Spot TCE Rate

$4,647

$15,071

Average Time Charter TC Rate

FULL FLEET

Average Spot TCE Rate

$21,713

$35,635

Average Time Charter TC Rate

$48,399

(1)

Time Charter Equivalent, or “TCE,” is a measure of the average daily revenue performance of a vessel. The Company calculates TCE by dividing net voyage revenue by total operating days for its fleet. Net voyage revenues are voyage revenues minus voyage expenses. The Company evaluates its performance using net voyage revenues. The Company believes that presenting voyage revenues, net of voyage expenses, neutralizes the variability created by unique costs associated with particular voyages or deployment of vessels on time charter or on the spot market and presents a more accurate representation of the revenues generated by its vessels. Please refer to the tables at the end of this release for a reconciliation of TCE and net voyage revenues to voyage revenues.  Spot TCEs include all spot voyages for the Company’s vessels, including those that were in Navig8 pools.

Second Quarter 2017 Results Summary 

The Company recorded net loss for the three months ended June 30, 2017 of $82.5 million, or $0.99 basic and diluted loss per share, compared to net income of $38.0 million, or $0.46 basic and diluted earnings per share, for the prior year period.

Adjusted net loss was $8.9 million, or $0.11 basic and diluted adjusted loss per share, for the three months ended June 30, 2017, compared to adjusted net income of $42.0 million, or $0.51 basic and diluted adjusted earnings per share, for the prior year period.

Adjusted EBITDA for the three months ended June 30, 2017 was $38.2 million, compared to $71.0 million for the prior year period. Please refer to the tables at the end of this press release for a reconciliation of adjusted net income and adjusted EBITDA to net income.

The average daily spot TCE rate obtained by the Company’s VLCC fleet, including its vessels that were deployed in the Navig8 pools, was $26,961 for the three months ended June 30, 2017. During the three months ended June 30, 2017, the Company’s “ECO” VLCC fleet earned an average daily TCE rate of $27,920, and the Company’s non-“ECO” VLCC fleet earned an average daily TCE rate of $20,670.  The average daily TCE rate obtained by the Company on a full-fleet basis was $21,713 during the three months ended June 30, 2017, compared to $35,825 for the prior year period.

Net voyage revenues decreased by $29.0 million, or 28.5%, to $72.8 million for the three months ended June 30, 2017 compared to $101.8 million dollars for the prior year period. The decrease in net voyage revenues was primarily attributable to the decrease in the Company’s average daily fleet TCE rate by $14,112, or 39.4%, to $21,713 for the three months ended June 30, 2017 compared to $35,825 for the prior year period.  The decrease in the Company’s average daily fleet TCE rate resulted in a decrease in net voyage revenue of approximately $40.1 million during the three months ended June 30, 2017 compared to the prior year period. The decrease in net voyage revenues was partially offset by an increase in the Company’s vessel operating days of 512 days, or 18.0%, to 3,352 days, for the three months ended June 30, 2017 compared to 2,841 days for the prior year period.  The increase in the Company’s vessel operating days resulted in an increase in net voyage revenue of approximately $11.1 million for the three months ended June 30, 2017 compared to the prior year period. The increase in the Company’s vessel operating days was primarily the result of the deployment of 9 additional VLCC newbuilding vessels since the end of the prior year period.

Direct vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs for owned vessels increased by $2.4 million, or 9.2%, to $27.9 million for the three months ended June 30, 2017 compared to $25.5 million for the prior year period. The increase was primarily due to increases in the Company’s average fleet size to 39.2 vessels for the three months ended June 30, 2017 from 33.4 vessels for the prior year period and associated increases in crew costs and other costs.  The increase in direct vessel operating expenses was partially offset by a decrease in daily direct vessel operating expenses per vessel of $601, or 7.1%, to $7,807 per day for the three months ended June 30, 2017 compared to $8,408 per day for the prior year period, primarily as a result of lower operating costs, including crew cost, repair and maintenance and other costs, associated with the Company’s newly delivered vessels.

General and administrative expenses increased by $2.6 million, or 37.0%, to $9.6 million for the three months ended June 30, 2017, compared to $7.0 million in the prior year period. During the three months ended June 30, 2017, we recorded as general and administrative expenses a write-off of assets of $1.5 million and litigation loss of $0.4 million, both of which are related to a May 2017 arbitration tribunal decision regarding a 2013 charter dispute submitted by a vessel owning subsidiary of the Company.

Depreciation and amortization increased by $6.7 million, or 33.8%, to $26.7 million for the three months ended June 30, 2017 compared to $20.0 million for the prior year period. The increase in depreciation and amortization was primarily due to an increase in vessel depreciation of $6.7 million, or 37.3%, to $25.0 million for the three months ended June 30, 2017 compared to $18.3 million in the prior year period. The increase in vessel depreciation was primarily due to an increase in the Company’s fleet size during the three months ended June 30, 2017 compared to the prior year period.

Loss on disposal of vessels, net increased by $68.6 million, to $67.9 million for the three months ended June 30, 2017 compared to a gain of $0.7 million for the prior year period. The increase in loss on disposal of vessels, net was primarily due to non-cash losses associated with the disposal of vessels and certain vessel equipment of $66.8 million related to the potential sale of the Gener8 Noble and Gener8 Theseus, which were moved to assets held for sale, and the sale of the Gener8 Orion, which was completed in June 2017.

Net interest expense increased by $10.0 million to $20.4 million for the three months ended June 30, 2017 compared to $10.4 million for the prior year period.  The increase was primarily attributable to the decrease in capitalized interest of $7.0 million, or 89.1%, to $0.8 million for the three months ended June 30, 2017 compared to $7.8 million in the prior year period related to the capitalization of interest expense associated with vessels under construction as a result of the funding of the acquisition of the Company’s VLCC newbuildings. Also contributing to the increase during the three months ended June 30, 2017, was an increase in interest expense associated with the Company’s senior secured credit facilities of $3.5 million, or 37.4%, to $12.8 million compared to $9.3 in the prior year period due to an increase in the Company’s outstanding borrowings under its senior secured credit facilities and senior notes, which totaled $1.6 billion and $1.3 billion as of June 30, 2017 and 2016, respectively.  The increase in net interest expense was partially offset by a reduction in net interest expense of $1.1 million related to the modification of the interest rate swaps agreements that were entered into on April 10, 2017, which included changes to the notional amounts, maturity dates, and an increase in the fixed rates payable under the interest rate swaps.

During the three months ended June 30, 2017, the Company’s interest rate swap agreements were ineffective, and the Company recorded $2.8 million of expenses related to the impact of the interest rate swap agreements.

As of June 30, 2017, the Company’s cash balance was $160.1 million, compared to $94.7 million as of December 31, 2016. As of June 30, 2017, the Company’s total debt was $1.6 billion and net debt was $1.4 billion.

As of June 30, 2017, there were 82,988,946 shares of the Company’s common stock outstanding.

Gener8 Maritime Fleet Profile (as of July 31, 2017)

Vessels on the Water

Type

Vessel Name

DWT

Year Built

Employment

1

VLCC

Gener8 Ethos

298,991

2017

VL8 Pool

2

VLCC

Gener8 Hector

297,363

2017

VL8 Pool

3

VLCC

Gener8 Theseus(1)

299,392

2016

VL8 Pool

4

VLCC

Gener8 Noble(1)

298,991

2016

VL8 Pool

5

VLCC

Gener8 Miltiades

301,038

2016

VL8 Pool

6

VLCC

Gener8 Oceanus

299,011

2016

VL8 Pool

7

VLCC

Gener8 Perseus

299,392

2016

VL8 Pool

8

VLCC

Gener8 Macedon

298,991

2016

VL8 Pool

9

VLCC

Gener8 Chiotis

300,973

2016

VL8 Pool

10

VLCC

Gener8 Constantine

299,011

2016

VL8 Pool

11

VLCC

Gener8 Andriotis

301,014

2016

VL8 Pool

12

VLCC

Gener8 Apollo

301,417

2016

VL8 Pool

13

VLCC

Gener8 Ares

301,587

2016

VL8 Pool

14

VLCC

Gener8 Hera

301,619

2016

VL8 Pool

15

VLCC

Gener8 Nautilus

298,991

2016

VL8 Pool

16

VLCC

Gener8 Success

300,932

2016

VL8 Pool

17

VLCC

Gener8 Supreme

300,933

2016

VL8 Pool

18

VLCC

Gener8 Athena

299,999

2015

VL8 Pool

19

VLCC

Gener8 Strength

300,960

2015

VL8 Pool

20

VLCC

Gener8 Neptune

299,999

2015

VL8 Pool

21

VLCC

Genmar Zeus

318,325

2010

VL8 Pool

22

VLCC

Gener8 Atlas

306,005

2007

VL8 Pool

23

VLCC

Gener8 Hercules

306,543

2007

VL8 Pool

24

VLCC

Gener8 Poseidon

305,795

2002

VL8 Pool

25

Suezmax

Gener8 Spartiate

164,925

2011

Suez8 Pool

26

Suezmax

Gener8 Maniate

164,715

2010

Suez8 Pool

27

Suezmax

Gener8 St. Nikolas

149,876

2008

Suez8 Pool

28

Suezmax

Gener8 Kara G

150,296

2007

Suez8 Pool

29

Suezmax

Gener8 George T

149,847

2007

Suez8 Pool

30

Suezmax

Gener8 Harriet G

150,296

2006

Suez8 Pool

31

Suezmax

Gener8 Argus

159,999

2000

Suez8 Pool

32

Suezmax

Gener8 Horn(1)

159,475

1999

Suez8 Pool

33

Suezmax

Gener8 Phoenix(1)

153,015

1999

Suez8 Pool

34

Aframax

Gener8 Pericles

105,674

2003

V8 Pool

35

Aframax

Gener8 Elektra(1)

106,560

2002

Spot

36

Aframax

Gener8 Defiance

105,538

2002

Spot

37

Panamax

Gener8 Companion

72,749

2004

Spot

38

Panamax

Genmar Compatriot

72,749

2004

Spot

Vessels on the Water Total

9,102,986

Newbuildings

Type

Vessel Name

DWT

Yard

Delivery Date

VLCC

Gener8 Nestor

300,000

HAN

Sep-17

(1)

Subject to contract for sale

Financial Information

Consolidated Statements of Operations for the Three and Six Months ended June 30, 2017

For the Three Months

For the Six Months

(Dollars in thousands, except per share data)

Ended June 30,

Ended June 30,

2017

2016

2017

2016

VOYAGE REVENUES:

Navig8 pool revenues

$          72,317

$          92,400

$        190,686

$        205,431

Time charter revenues

2,047

9,278

Spot charter revenues

2,628

11,511

7,275

15,293

Total voyage revenues 

74,945

105,958

197,961

230,002

Voyage expenses 

2,152

4,194

3,854

6,551

Net voyage revenues

72,793

101,764

194,107

223,451

OPERATING EXPENSES:

Direct vessel operating expenses 

27,881

25,532

56,901

50,061

Navig8 charterhire expenses

(6)

(49)

3,221

General and administrative 

9,626

7,024

18,052

15,112

Depreciation and amortization 

26,780

20,023

54,474

37,504

Loss (gain) on disposal of vessels, net

67,860

(714)

77,703

(579)

Total operating expenses 

132,141

51,816

207,130

105,319

OPERATING (LOSS) INCOME

$          (59,348)

$          49,948

$          (13,023)

$          118,132

OTHER EXPENSES:

Interest expense, net 

(20,447)

(10,361)

(40,498)

(17,656)

Other financing costs 

(3)

(4)

(55)

(6)

Other income (expense), net 

(2,747)

(1,588)

(2,105)

(1,617)

Total other expenses 

(23,197)

(11,953)

(42,658)

(19,279)

NET (LOSS) INCOME

$          (82,545)

$          37,995

$          (55,681)

$          98,853

(LOSS) INCOME PER COMMON SHARE

Basic

$              (0.99)

$                0.46

$              (0.67)

$                1.20

Diluted

$              (0.99)

$                0.46

$              (0.67)

$                1.20

Selected Balance Sheet Data

June 30,

December 31,

BALANCE SHEET DATA, at end of period

2017

2016

(Dollars in thousands)

     Cash & cash equivalents

$              160,146

$                 94,681

     Current assets, including cash

403,228

215,285

Total assets

2,938,234

2,992,669

     Current liabilities, incl. current portion of LTD

197,850

216,566

     Current portion of LTD

160,446

181,023

Total LTD, incl. current portion & discount

1,576,212

1,581,951

Shareholders’ equity

1,381,118

1,437,411

Reconciliation Tables

EBITDA represents net income (loss) plus net interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude the items set forth in the table below, which represent certain non-cash, one-time and other items that the Company’s believes are not indicative of the ongoing performance of its core operations. Adjusted Net Income represents Net Income adjusted to exclude the same non-cash, one-time and other items, as well as commitment fees. EBITDA, Adjusted EBITDA and Adjusted Net Income are included in this presentation because they are used by management and certain investors as measures of operating performance. EBITDA, Adjusted EBITDA and Adjusted Net Income are used by analysts in the shipping industry as common performance measures to compare results across peers. EBITDA, Adjusted EBITDA and Adjusted Net Income are not items recognized by accounting principles generally accepted in the United States of America (“GAAP”), and should not be considered in isolation or used as alternatives to net income, operating income, cash flow from operating activity or any other indicator of the Company’s operating performance or liquidity required by GAAP. The Company’s presentation of EBITDA, Adjusted EBITDA and Adjusted Net Income is intended to supplement investors’ understanding of its operating performance by providing information regarding its ongoing performance that exclude items the Company believes do not directly affect its core operations and enhancing the comparability of its ongoing performance across periods. The Company presents Adjusted EBITDA and Adjusted Net Income in addition to EBITDA and Net Income because Adjusted EBITDA and Adjusted Net Income eliminate the impact of additional non-cash, one-time and other items not associated with the ongoing performance of its core operations, including charges associated with stock-based compensation, gains and losses on the sale of vessels and costs associated with its financing activities, that the Company believes further reduce the comparability of the ongoing performance of its core operations across periods. The Company’s management considers EBITDA, Adjusted EBITDA and Adjusted Net Income to be useful to investors because such performance measures provide information regarding the profitability of its core operations and facilitate comparison of its operating performance to the operating performance of the Company’s peers. Additionally, the Company’s management uses EBITDA, Adjusted EBITDA and Adjusted Net Income as performance measures and they are also presented for review at the Company’s board meetings. While the Company believes these measures are useful to investors, the definitions of EBITDA, Adjusted EBITDA and Adjusted Net Income used here may not be comparable to similar measures used by other companies. In addition, these definitions are also not the same as the definition of EBITDA, Adjusted EBITDA and Adjusted Net Income used in the financial covenants in the Company’s debt instruments. During the three and six months ended June 30, 2017 we included in Adjusted EBITDA Loss on litigation due to a May 2017 arbitration tribunal decision regarding a 2013 charter dispute submitted by a vessel owning subsidiary of the Company.

Please see below for a reconciliation of the following adjusted amounts to Net Income (dollars in thousands)

Three Months Ended

Six Months Ended

Jun-17

Jun-16

Jun-17

Jun-16

Net (Loss) Income

$          (82,545)

$          37,995

$  (55,681)

$          98,853

+ Stock-based compensation expense

758

1,427

2,835

2,855

+ Loss on disposal of vessels, net

67,860

(714)

77,703

(579)

+ Other financing costs

3

4

55

6

+ Professional fees related to interest rate swaps

327

260

327

+ Commitment Fees

175

1,391

450

3,312

+ Impact of interest rate swaps fair value

2,771

1,560

2,109

1,560

+ Non-cash G&A expenses, excluding stock-based compensation

1,711

1,488

+ Loss on litigation

400

400

Net (Loss) Income, adjusted

$          (8,867)

$         41,990

$         29,619

$       106,334

Weighted average shares outstanding, basic, in thousands

82,979

82,681

82,970

82,681

Weighted average shares outstanding, diluted, in thousands

82,979

82,681

82,970

82,681

Basic net (loss) income per share, adjusted

$           (0.11)

$             0.51

$             0.36

$             1.29

Diluted net (loss) income per share, adjusted

$           (0.11)

$             0.51

$             0.36

$             1.29

Three Months Ended

Six Months Ended

Jun-17

Jun-16

Jun-17

Jun-16

Net (Loss) Income

$       (82,545)

$        37,995

$       (55,681)

$        98,853

+ Interest expense, net

20,447

10,361

40,498

17,656

+ Depreciation and amortization

26,780

20,023

54,474

37,504

EBITDA

$       (35,318)

$        68,379

$         39,291

$     154,013

+ Stock-based compensation expense

758

1,427

2,835

2,855

+ Loss on disposal of vessels, net

67,860

(714)

77,703

(579)

+ Other financing costs

3

4

55

6

+ Professional fees related to interest rate swaps

327

260

327

+ Impact of interest rate swaps fair value

2,771

1,560

2,109

1,560

+ Non-cash G&A expenses, excluding stock-based compensation

1,711

1,488

+ Loss on litigation

400

400

EBITDA, adjusted

$       38,185

$       70,983

$     124,141

$     158,182

(1)

Non-cash G&A expenses, excluding stock-based compensation expense, include accounts receivable reserves (including revenue offsets), amortization of lease assets that were recorded in connection with fresh start accounting and amortization of straight line rent expense.  The presentation of prior year amounts have been conformed to the current year presentation.

Net debt represents total debt less cash, discounts and deferred financing costs.  Net debt is included is this presentation because it is used by management and certain investors as a measure of the Company’s overall liquidity, financial flexibility and leverage. Furthermore, certain investors, creditors, and credit analysts monitor the Company’s net debt as part of their assessments of its business.  Net debt is not recognized by GAAP, and should not be considered in isolation or used as alternatives financial condition or liquidity required by GAAP. In particular, the Company typically needs a portion of its cash for purposes other than debt reduction. The deduction of these items from total debt in the calculation of net debt should thus not be understood to mean that any of these items are available exclusively for debt reduction at any given time.

Long-term debt reconciliation table

Please see below for a reconciliation of the following adjusted amounts to long-term debt (dollars in thousands)

Reconciliation of total long-term debt

June 30,

December 31,

2017

2016

     Long-term debt

$           1,415,766

$           1,400,928

     Current portion of long-term debt

160,446

181,023

Total long-term debt, incl. current portion,

$     1,576,212

$     1,581,951

discount and deferred financing costs

Net Voyage Revenue & Operating Days Reconciliation Tables

Gener8 Maritime Net Voyage Revenue & Operating Days

(Dollars in thousands, except Operating Days data)

Three Months Ended

Jun-17

Jun-16

VLCC

ECO Fleet Net Voyage Revenue (1)

$          50,762

$          39,450

ECO Fleet Operating Days (1)

1,818

852

Non-ECO Fleet Net Voyage Revenue (1)

$            5,680

$          22,248

Non-ECO Fleet Operating Days (1)

275

526

Spot Charter & Navig8 Pool Net Voyage Revenues

$          56,442

$          61,698

Spot Charter & Navig8 Pool Operating Days

2,093

1,378

Time Charter Revenue

$                     –

$            2,047

Time Charter Operating Days

42

SUEZMAX

Spot Charter & Navig8 Pool Net Voyage Revenues

$          12,826

$          28,293

Spot Charter & Navig8 Pool Operating Days

835

898

Time Charter Revenue

$                    –

$                     –

Time Charter Operating Days

AFRAMAX

Spot Charter & Navig8 Pool Net Voyage Revenues

$            2,963

$            6,984

Spot Charter & Navig8 Pool Operating Days

301

341

PANAMAX

Spot Charter Revenue

$               576

$            2,743

Spot Operating Days

123

182

Gener8 Maritime Full Fleet Net Voyage Revenues

(Dollars in thousands)

Three Months Ended

Jun-17

Jun-16

Total Voyage Revenues

$          74,945

$       105,958

Total Voyage Expenses

2,152

4,194

Total Net Voyage Revenues

$          72,793

$        101,764

(1)

Includes all spot voyages for the Company’s vessels, including those that were in the Navig8 Pools.

LEAVE A COMMENT

×

Comments are closed.