Navios Acquisition Reports Second Quarter Net Income of USD 32.4 Million

Navios Acquisition

Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results for the second quarter and six months ended June 30, 2020.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “I am pleased with our results for the second quarter of 2020. During the quarter, Navios Acquisition recorded revenue of $112.2 million, adjusted EBITDA of $72.7 million and adjusted net income of $32.4 million, or $2.03 per share. Our chartering strategy focuses on capturing upside and we earned $20.7 million in profit sharing in the second quarter of 2020. We also declared a quarterly distribution of $0.30 cents per share for the second quarter.”

Angeliki Frangou continued, “During the quarter, we expanded our VLCC fleet by bareboat chartering-in one vessel. We now have bareboat chartered-in four newbuild vessels with in no initial capital outlay. We also successfully liquidated our investment vehicle, Navios Europe II and converted $37.7 million into steel value and cash.

For the second half of 2020, we have 74.0% of our available days fixed (22.1% with profit sharing) at an average charter rate of $19,622 per day estimated to generate $116.2 million of revenue. This contracted rate excludes potential profit sharing. Navios Acquisition has 48.1% of available days with market exposure and a breakeven rate of $14,775 per open /floating day. “

HIGHLIGHTS — RECENT DEVELOPMENTS

Quarterly dividend: $0.30 per share

On July 28, 2020, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2020 of $0.30 per share of common stock, which will be paid on October 8, 2020 to stockholders of record as of September 4, 2020. 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.

Debt developements

In June 2020, Navios Acquisition entered into a loan agreement with a commercial bank of $20.8 million in order to refinance the outstanding balance on the existing facility of two product tankers. The facility is repayable in 16 quarterly installments of $0.8 million each with a final balloon payment of $8.0 million repayable on the last repayment date. The facility matures in June 2024 and bears interest at LIBOR plus 300 bps per annum.

In June 2020, Navios Acquisition entered into sale and leaseback agreements with unrelated third parties for $72.1 million in order to refinance the outstanding balance on the existing facilities of four product tankers. The agreements will be repaid through periods ranging from four to seven years in consecutive quarterly installments of up to $1.8 million each, with a repurchase obligation of up to $27.0 million in total. The sale and leaseback arrangement bears interest at LIBOR plus a margin ranging from 390 bps to 410 bps per annum, depending on the vessel financed.

During the second quarter of 2020, Navios Acquisition prepaid a total of $76.3 million of its existing bank financings.

In the third quarter 2020, Navios Acquisition repurchased $5.0 million of its ship mortgage notes for a cost of $2.9 million.

Liquidation of Navios Europe II Inc.

On June 29, 2020, following the liquidation of Navios Europe II, Navios Acquisition was allocated $8.9 million in cash and seven containerships with their associated working capital. The vessels are accounted for as held for sale. Navios Acquisition drew $41.7 million under a new short term credit facility secured with the seven containerships and repaid $45.1 million of the vessel’s indebtedness.

Continuous Offering Program

On November 29, 2019, Navios Acquisition entered into a Continuous Offering Program Sales Agreement, pursuant to which Navios Acquisition may issue and sell from time to time through the sales agent shares of common stock having an aggregate offering price of up to $25.0 million. As of July 28, 2020, since the commencement of the program, Navios Acquisition has issued 516,250 shares of common stock and received net proceeds of $3.2 million.

Exercised our option for VLCC newbuilding under bareboat charter

In the second quarter of 2020, Navios Acquisition exercised its option for a fourth Japanese newbuild VLCC under a twelve year bareboat charter agreement with de-escalating purchase options and expected delivery in the second quarter of 2022.

The bareboat agreement reflects an implied price of approximately $84.5 million and an annual effective interest of approximately 6% fixed for the duration of the agreement.

Fleet employment

As of July 28, 2020, Navios Acquisition’s core fleet consisted of a total of 47 vessels, of which 14 are very large crude carriers (“VLCCs”) (including four bareboat chartered-in VLCCs expected to be delivered in each of the fourth quarter of 2020, and the first and the third quarters of 2021 and the second quarter of 2022), 31 are product tankers and two are chemical tankers. Navios Acquisition also owns seven containerships that are accounted for as held for sale.

Currently, Navios Acquisition has contracted 85.5% of its available days of its core fleet on a charter-out basis for the remaining six month period of 2020. The average base contractual net daily charter-out rate for the 74.0% of available days that are contracted on base rate and/or base rate with profit sharing arrangements is expected to be $19,622 for the second half of 2020.

Three month periods ended June 30, 2020 and 2019

Revenue for the three month period ended June 30, 2020 increased by $53.6 million, or 91.6%, to $112.2 million, as compared to $58.6 million for the same period of 2019. The increase was mainly attributable to an: (i) increase in revenue by $8.1 million due to the acquisition of five product tankers of Navios Europe I in December 2019; and (ii) increase in market rates during the three month period ended June 30, 2020 as compared to the same period of 2019; partially mitigated by the sale of three VLCCs in 2019. Available days of the fleet increased to 3,859 days for the three month period ended June 30, 2020, as compared to 3,503 days for the three month period ended June 30, 2019, due to the reasons mentioned above. The time charter equivalent rate, or TCE Rate, increased to $28,187 for the three month period ended June 30, 2020, from $15,525 for the three month period ended June 30, 2019.

Time charter and voyage expenses for the three month period ended June 30, 2020 decreased by $0.7 million, or 17.8%, to $3.5 million, as compared to $4.2 million for the same period of 2019. The decrease was mainly attributable to a $1.1 million decrease in bunkers consumption and voyage expenses related to the spot voyages incurred in the period; partially mitigated by a $0.4 million increase in brokers’ commission.

Net income was $31.0 million for the three month period ended June 30, 2020 as compared to $16.6 million net loss for the same period of 2019. Net income was affected by the items described in the table above. Adjusted net income for the three month period ended June 30, 2020 was $32.4 million as compared to $18.6 million adjusted net loss for the same period of 2019. The increase in adjusted net income was mainly attributable to a : (a) $50.6 million increase in adjusted EBITDA; (b) $2.9 million decrease in interest expense and finance cost (excluding write off of deferred finance costs); and (c) $0.7 million decrease in depreciation and amortization; partially mitigated by a : (i) $2.3 million decrease in interest income; and (ii) $1.0 million increase in direct vessel expenses (in relation to amortization of dry dock and special survey cost).

Adjusted EBITDA affected by the items described in the table above, for the three month period ended June 30, 2020 increased by $50.6 million to $72.7 million, as compared to $22.1 million for the same period of 2019. The increase in Adjusted EBITDA was mainly due to a: (a) $53.6 million increase in revenue; (b) $0.7 million decrease in time charter and voyage expenses; (c) $0.4 million decrease in general and administrative expenses (excluding stock-based compensation); and (d) $0.2 million increase in other expense; partially mitigated by a: (i) $3.4 million increase in operating expenses mainly due to the acquisition of the five product tankers of Navios Europe I in December 2019 and to the amendment of the fees under the management agreement, that was also partially impacted by the sale of three VLCCs in 2019; and (ii) $0.9 million decrease in equity in net earnings of affiliated companies.

Six month periods ended June 30, 2020 and 2019

Revenue for the six month period ended June 30, 2020 increased by $74.4 million, or 54.8%, to $210.1 million, as compared to $135.7 million for the same period of 2019. The increase was mainly attributable to an: (i) increase in revenue by $16.9 million due to the acquisition of five product tankers of Navios Europe I in December 2019; and (ii) increase in market rates during the six month period ended June 30, 2020 as compared to the same period of 2019; partially mitigated by the sale of three VLCCs in 2019. Available days of the fleet increased to 7,614 days for the six month period ended June 30, 2020, as compared to 7,187 days for the six month period ended June 30, 2019, due to the reasons mentioned above. The TCE Rate increased to $26,339 for the six month period ended June 30, 2020, from $17,635 for the six month period ended June 30, 2019.

Time charter and voyage expenses for the six month period ended June 30, 2020 increased by $0.5 million, or 6.3%, to $9.5 million, as compared to $9.0 million for the same period of 2019. The increase was mainly attributable to a: (a) $0.4 million increase in brokers’ commission; and (b) a $0.1 million increase in bunkers consumption and voyage expenses related to the spot voyages incurred in the period.

Net income was $31.9 million for the six month period ended June 30, 2020 as compared to $15.7 million net loss for the same period of 2019. Net income was affected by the items described in the table above. Adjusted net income for the six month period ended June 30, 2020 was $47.2 million as compared to $18.0 million adjusted net loss for the same period of 2019. The increase in adjusted net income was mainly attributable to a : (a) $65.6 million increase in adjusted EBITDA; (b) $3.8 million decrease in interest expense and finance cost (excluding write off of deferred finance costs) ; and (c) $1.8 million decrease in depreciation and amortization; partially mitigated by a: (i) $4.4 million decrease in interest income; and (ii) $1.5 million increase in direct vessel expenses (in relation to amortization of dry dock and special survey cost).

Adjusted EBITDA affected by the items described in the table above, for the six month period ended June 30, 2020 increased by $65.6 million to $129.0 million, as compared to $63.4 million for the same period of 2019. The increase in Adjusted EBITDA was mainly due to a: (a) $74.4 million increase in revenue; and (b) $1.5 million decrease in general and administrative expenses (excluding stock-based compensation); partially mitigated by a: (i) $5.3 million increase in operating expenses mainly due to the acquisition of the five product tankers of Navios Europe I in December 2019 and to the amendment of the fees under the management agreement, that was also partially impacted by the sale of three VLCCs in 2019; (ii) $1.7 million decrease in equity in net earnings of affiliated companies; (iii) $1.3 million decrease in other income; (iv) $1.0 million increase in other expense; (v) $0.6 million increase in time charter and voyage expenses; and (vi) $0.4 million increase in direct vessel expenses (other than amortization of dry dock and special survey cost).

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