Navios Acquisition posts strong third quarter results

Angeliki Frangou

Navios Acquisition, an owner and operator of tanker vessels, reported its financial results today for the third quarter and the nine month period ended September 30, 2016. 

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “Navios Acquisition recorded a net income of $44.8 million or $0.28 per share for the first nine months of 2016, of which $8.8 million, or $0.06 per share, was recorded in the third quarter.  EBITDA for the first nine months of 2016 was $144.7 million, of which $41.7 million was recorded in the third quarter. Profit sharing captured market upside and earned $7.7 million during the first nine months of 2016, including $0.3 million in the third quarter.  We also declared a dividend of $0.05 per share for the quarter, resulting in a dividend yield of about 16%.”

Angeliki Frangou continued, “Our chartering policy of seeking long-term charters provided above market earnings during the third quarter, a period during which spot charter rates were correcting.  Navios Acquisition’s average charter rate for its fleet, excluding its chemical tankers, was about 54% higher than the market average. Our fleet is effectively fixed for the balance of 2016 and 60.4% fixed for 2017.  Our results speak to the strength of our business model, particularly when coupled with low operating costs which are fixed through mid-2018 at rates about 11% below industry average.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Dividend of $0.05 per share of common stock

On November 4, 2016, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2016 of $0.05 per share of common stock. The dividend is payable on December 21, 2016 to stockholders of record as of December 14, 2016 and provides a current annualized yield of 16.0%.

Sale of chemical tanker

On October 4, 2016, Navios Acquisition sold the Nave Universe, a 2013-built, chemical tanker of 45,513 dwt to an unaffiliated third party for a sale price net of commissions of $36.4 million. Part of the net proceeds from the sale of the vessel amounting to $16.4 million were used to fully repay the outstanding amount of its credit facility.

Time Charter Coverage and profit sharing

Navios Acquisition currently owns 37 vessels, of which eight are VLCCs, 26 are product tankers and three are chemical tankers which include the Nave Constellation, a 2013-built chemical tanker of 45,281 dwt that Navios Acquisition has agreed to sell following the completion of its chartering commitments, expected during the fourth quarter of 2016.

As of November 8, 2016, Navios Acquisition had contracted 99.7% and 60.4% of its available days on a charter-out basis for 2016 and 2017, respectively, expecting to generate revenues of approximately $270.1 million and $123.6 million, respectively. The average contractual daily charter-out rate for the fleet is expected to be $20,574 and $20,356 for 2016 and 2017, respectively.

During the three month period and the nine month period ended September 30, 2016, Navios Acquisition recognized $0.3 million and $7.7 million, respectively, under its profit sharing arrangements.

Loan to affiliate

On September 19, 2016, Navios Acquisition entered into a $70.0 million secured loan facility with Navios Maritime Holdings Inc. (“Navios Holdings”). The loan facility is secured by all of Navios Holdings’ interest in Navios Acquisition and 78.5% of Navios Holdings’ interest in Navios South American Logistics, Inc. (“Navios Logistics”) representing a majority of the shares outstanding of Navios Logistics. In addition, the loan facility provides for an arrangement fee of $0.7 million, is available for up to five drawings and has a fixed interest rate of 8.75% compounded semi-annually with a maturity date of November 15, 2018. As of September 30, 2016, $50.0 million was drawn under this loan facility.

Purchase option extended for three VLCCs

In connection with the IPO of Navios Maritime Midstream Partners L.P. (“Navios Midstream”), Navios Acquisition granted options to Navios Midstream, exercisable until November 18, 2016, to purchase seven VLCCs (two of which, the Nave Celeste and the C. Dream, were sold to Navios Midstream in June 2015) from Navios Acquisition at fair market value. In October 2016, Navios Acquisition extended the options of three of the five remaining VLCCs, the Nave Buena Suerte, the Nave Neutrino and the Nave Electron, for an additional two-year period expiring on November 18, 2018. The purchase options pursuant to the extended period do not include any backstop commitments from Navios Acquisition.

FINANCIAL HIGHLIGHTS

For the following results and the selected financial data presented herein, Navios Acquisition has compiled its consolidated statement of income for the three months and nine months ended September 30, 2016 and 2015. The quarterly information for 2016 and 2015 was derived from the unaudited condensed consolidated financial statements for the respective periods.

(Expressed in thousands of U.S. dollars) Three Month
Period ended
September 30,
2016
(unaudited)
Three Month
Period ended
September 30,
2015
(unaudited)
Nine Month
Period ended
September 30,
2016
(unaudited)
Nine Month
Period ended
September 30,
2015
(unaudited)
Revenue $   68,069 $ 77,692 $ 222,983 $ 236,711
Net cash provided by operating activities $ 40,104 $ 37,344 $ 90,341 $ 91,488
EBITDA $ 41,706 $ 54,530 $ 144,660 $ 168,136
Net income $ 8,817 $ 23,216 $ 44,771 $ 69,612
Earnings per share (basic) $ 0.06 $ 0.15 $ 0.28 $ 0.44

EBITDA is a non-GAAP financial measure and should not be used in isolation or substitution for Navios Acquisition’s results (see Exhibit II for reconciliation of EBITDA).

Three month periods ended September 30, 2016 and 2015   

Revenue for the three month period ended September 30, 2016 decreased by $9.6 million or 12.4% to $68.1 million, as compared to $77.7 million for the same period of 2015. The decrease was mainly attributable to the decrease in profit sharing by $9.7 million to $0.3 million recognized in the three month period ended September 30, 2016, as compared to $10.0 million for the same period in 2015. The decrease was partially mitigated by the increase in revenue following the deliveries of two vessels in the fourth quarter of 2015. Available days of the fleet increased to 3,496 days for the three month period ended September 30, 2016, as compared to 3,397 days for the three month period ended September 30, 2015. The TCE Rate decreased to $19,159 for the three month period ended September 30, 2016, from $22,551 for the three month period ended September 30, 2015.

EBITDA for the three month period ended September 30, 2016 decreased by $12.8 million to $41.7 million from $54.5 million in the same period of 2015. The decrease in EBITDA was mainly due to a: (i) $9.6 million decrease in revenue; (ii) $2.0 million increase in management fees mainly due to the deliveries of the vessels discussed above; (iii) $1.6 million decrease in equity in net earnings of affiliated companies; and (iv) $0.2 million increase in general and administrative expenses; partially mitigated by a $0.6 million decrease in other expense, net.

Net income for the three month period ended September 30, 2016, decreased by approximately $14.4 million to $8.8 million compared to $23.2 million, for the same period in 2015. The decrease was due to: (i) a decrease of $12.8 million in EBITDA; (ii) an increase of $1.1 million in interest expense and finance cost; (iii) an increase of $0.6 million in depreciation and amortization; and (iv) an increase of $0.4 million in amortization of dry docking and special survey costs; partially mitigated by an increase of $0.6 million in interest income.

Nine month periods ended September 30, 2016 and 2015

Revenue for the nine month period ended September 30, 2016 decreased by $13.7 million or 5.8% to $223.0 million, as compared to $236.7 million for the same period of 2015. The decrease was mainly attributable to: (i) the decrease in profit sharing by $18.5 million to $7.7 million recognized in the nine month period ended September 30, 2016, as compared to $26.2 million for the same period in 2015; and (ii) the decrease in revenue by $15.7 million due to the sale of two VLCCs in June 2015 and one MR2 tanker vessel in January 2016. The decrease was partially mitigated by the increase in revenue following deliveries of four vessels during the period from January 2015 until September 2016. Available days of the fleet increased to 10,410 days for the nine month period ended September 30, 2016, as compared to 10,357 days for the nine month period ended September 30, 2015. The TCE Rate decreased to $21,082 for the nine month period ended September 30, 2016, from $22,538 for the nine month period ended September 30, 2015.

EBITDA for the nine month period ended September 30, 2016 decreased by approximately $23.5 million to $144.7 million from $168.1 million in the same period of 2015. The decrease in EBITDA was mainly due to a: (i) $13.7 million decrease in revenue; (ii) decrease in the gain on sale of vessels by $3.5 million; (iii) $2.6 million increase in general and administrative expenses; (iv) $2.2 million increase in management fees mainly due to the deliveries of the vessels discussed above; (v) $0.7 million increase in direct vessel expenses (excluding amortization of dry dock and special survey costs); (vi) $0.4 million increase in other expense, net; (vii) $0.2 million increase in time charter expenses; and (viii) $0.1 million decrease in equity in net earnings of affiliated companies.

Net income for the nine month period ended September 30, 2016 decreased by $24.8 million to $44.8 million from $69.6 million for the same period of 2015. The decrease was due to: (i) a decrease of $23.5 million in EBITDA; (ii) an increase of $1.8 million in interest expense and finance cost; and (iii) an increase of $1.0 million in amortization of dry docking and special survey costs included in direct vessel expenses. The decrease was partially mitigated by an increase of $1.5 million in interest income.

Fleet Employment Profile

The following table reflects certain key indicators of the performance of Navios Acquisition and its core fleet for the three and nine months ended September 30, 2016 and 2015.

Three month period ended
September 30,
Nine month period ended
September 30,
2016
(unaudited)
2015
(unaudited)
2016
(unaudited)
2015
(unaudited)
FLEET DATA
Available days(1) 3,496 3,397 10,410 10,357
Operating days(2) 3,489 3,389 10,388 10,325
Fleet utilization(3) 99.8 % 99.8 % 99.8 % 99.7 %
Vessels operating at period end 38 37 38 37
AVERAGE DAILY RESULTS
Time Charter Equivalent (“TCE”) Rate per day(4) $ 19,159 $ 22,551 $ 21,082 $ 22,538

(1)  Available days: Available days for the fleet represent the total calendar days the vessels were in Navios Acquisition’s possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.

(2)  Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.

(3)  Fleet utilization: Fleet utilization is the percentage of time that Navios Acquisition’s vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off hire for reasons other than scheduled repairs, dry dockings or special surveys.

(4)  TCE Rate: Time Charter Equivalent Rate is defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE Rate is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels of various types of charter contracts for the number of available days of the fleet.

LEAVE A COMMENT

×

Comments are closed.