Navios Acquisition posts deeper third quarter loss

Navios Acquisition

Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results for the third quarter and the nine month period ended September 30, 2018.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “For the third quarter of 2018, Navios Acquisition reported revenue of $41.6 million and Adjusted EBITDA of $9.9 million. We also declared a quarterly dividend of $0.02 cents per share for the third quarter, representing an annualized dividend of $0.08 cents per share.”

Angeliki Frangou continued, “Since September, tanker rates have substantially improved, with the TD3 VLCC spot rate increasing by 213% to about $51,000 per day and the one-year time charter rate increasing by about 44% to $28,000 per day. In light of this, not only is the combination with Navios Maritime Midstream Partners L.P. expected to reduce operating breakeven for available days -not subject to fixed rates- by almost 15%, but also to increase our available days by 17% to about 15,000 days.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Agreement to Acquire Navios Maritime Midstream Partners LP
On October 8, 2018 Navios Maritime Midstream Partners L.P. (“Navios Midstream”) (NYSE:NAP) and Navios Acquisition announced that they entered into a definitive merger agreement under which Navios Acquisition will acquire all of the publicly held units of Navios Midstream in exchange for shares of Navios Acquisition.

The conflicts committee of the board of directors of Navios Midstream negotiated the transaction on behalf of Navios Midstream and its public unitholders. The transaction was unanimously approved by the Conflicts Committee, the board of directors of Navios Midstream and the board of directors of Navios Acquisition.

The approval and adoption of the merger agreement and the merger requires approval by a majority of the outstanding Navios Midstream common units. Navios Acquisition owns a sufficient number of Navios Midstream common units to approve the merger on behalf of all Navios Midstream unitholders and has agreed to consent to the merger. The closing of the merger is subject to customary closing conditions, including effectiveness of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission on October 30, 2018 and the mailing of an information statement to the Navios Midstream unitholders.

Reverse stock split
Navios Acquisition previously announced that its Board of Directors has approved a 1-for-15 reverse stock split of its issued and outstanding shares of common stock. The reverse stock split is subject to stockholder approval, which Navios Acquisition intends to seek at a special meeting of its stockholders scheduled to be held on November 9, 2018.

Quarterly dividend: $0.02 per share
On November 2, 2018, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2018 of $0.02 per share of common stock. The dividend is payable on December 5, 2018 to stockholders of record as of November 27, 2018. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

Stock repurchase program
As of November 5, 2018, Navios Acquisition had repurchased 9,221,255 shares for approximately $6.8 million, under the $25.0 million stock repurchase program, providing an additional return of 6.1% to our stockholders.

Time charter coverage
As of November 5, 2018, our fleet consisted of a total of 37 vessels, of which seven are VLCCs, 26 are product tankers, two are chemical tankers and two are bareboat VLCC chartered-in vessels to be delivered in Q3 2020 and Q4 2020, respectively.

Currently, Navios Acquisition has contracted 99.2% and 32.7% of its available days on a charter-out basis for 2018 and 2019, respectively, which is expected to generate revenues of approximately $160.1 million and $50.1 million for 2018 and 2019, respectively. The average contractual net daily charter-out rate for the 93.6% and the 26.6% of the available days that are contracted on base rate and/or on base rate with profit sharing arrangements is expected to be $13,531 and $14,721 for 2018 and 2019, respectively.

Three month periods ended September 30, 2018 and 2017

Revenue for the three month period ended September 30, 2018 decreased by $12.4 million, or 23.0%, to $41.6 million, as compared to $54.0 million for the same period of 2017. The decrease was mainly attributable to a: (i) decrease in the market rates during the third quarter ended September 30, 2018, as compared to the same period in 2017; and (ii) decrease in revenue of $2.4 million due to the sale of the Nave Galactic to Navios Midstream in March 2018. Available days of the fleet decreased to 3,178 days for the three month period ended September 30, 2018, as compared to 3,215 days for the three month period ended September 30, 2017. The time charter equivalent rate, or TCE Rate, decreased to $12,394 for the three month period ended September 30, 2018, from $16,486 for the three month period ended September 30, 2017.

Net loss for the three month period ended September 30, 2018 was $23.4 million as compared to $8.1 million for the same period of 2017. The increase in net loss was due to a: (a) $13.7 million decrease in EBITDA; (b) $1.0 million increase in direct vessel expenses; (c) $0.7 million decrease in interest income; and (d) $0.4 million increase in interest expense and finance cost, net of deferred finance cost; partially mitigated by a $0.4 million decrease in depreciation and amortization.

EBITDA for the three month period ended September 30, 2018 decreased by approximately $13.7 million to $9.6 million, as compared to $23.3 million for the same period of 2017. The decrease in EBITDA was mainly due to a: (a) $12.4 million decrease in revenue, as described above; (b) $2.5 million increase in time charter expenses mainly due to the increase of the accrued backstop commitment to Navios Midstream and the voyage expenses incurred in the period; and (c) $0.3 million increase in general and administrative expenses due to the stock based compensation; partially mitigated by a: (i) $0.8 million increase in equity /(loss) in net earnings of affiliated companies; (ii) $0.6 million decrease in management fees, due to the sale of the Nave Galactic to Navios Midstream in March 2018, which was partially offset by the amendment to the fees under the Management Agreement; and (iii) $0.2 million decrease in other expense, net.

Nine month periods ended September 30, 2018 and 2017

Revenue for the nine month period ended September 30, 2018 decreased by $47.7 million, or 27.0%, to $129.2 million, as compared to $177.0 million for the same period of 2017. The decrease was mainly attributable to a: (a) decrease in the market rates during the nine month period ended September 30, 2018, as compared to the same period in 2017; and (b) decrease in revenue of $6.5 million mainly due to the sale of the Nave Galactic to Navios Midstream in March 2018. Available days of the fleet decreased from 9,678 days for the nine month period ended September 30, 2017 to 9,439 days for the nine month period ended September 30, 2018. The TCE Rate decreased from $17,814 for the nine month period ended September 30, 2017, to $13,287 for the nine month period ended September 30, 2018.

Net loss for the nine month period ended September 30, 2018 was $69.9 million as compared to $66.9 million for the same period of 2017. The increase was due to a: (a) $2.4 million increase in direct vessel expenses; (b) $1.6 million decrease in interest income; and (c) $0.4 million increase in interest expense and finance cost; partially mitigated by a (i) $0.9 million decrease in depreciation and amortization and (ii) $0.5 million increase in EBITDA.

EBITDA for the nine month period ended September 30, 2018 increased by $0.5 million to $29.1 million, as compared to $28.7 million for the same period of 2017. The increase in EBITDA was mainly due to a: (a) $55.7 million increase in equity /(loss) in net earnings of affiliated companies (which includes $59.1 million of non-cash impairment loss on equity investment in Navios Midstream in the second quarter of 2017); and (b) $1.4 million decrease in management fees, due to the sale of the Nave Galactic to Navios Midstream in March 2018, which was partially offset by the amendment to the fees under the Management Agreement; partially mitigated by a (i) $47.7 million decrease in revenue, as described above; (ii) $6.0 million increase in time charter expenses mainly due to the increase of the accrued backstop commitment to Navios Midstream; (iii) $1.9 million increase in general and administrative expenses; and (iv) $1.0 million increase in other expense, net.

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