Navios Acquisition sees red in second quarter due to oil price volatility

Navios_Partners

Navios Maritime Acquisition Corporation (“Navios Acquisition”) (NYSE:NNA), an owner and operator of tanker vessels, reported its financial results for the second quarter and the six month period ended June 30, 2017.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “For the second quarter of 2017, we reported Revenue of $58.5 million and Adjusted EBITDA of $27.1 million. We also declared a dividend of $0.05 per share for the quarter, resulting in a dividend yield of about 14.0%.”

Angeliki Frangou continued, “The recent volatility in oil price and the continued uncertainty concerning commodity pricing have affected oil transportation. However, our chartering strategy of seeking long-term employment has insulated us somewhat. We have earned above-market charter rates when spot rates were contracting and period employment was unavailable. In the first six months of 2017, our average charter rate was estimated about 51% higher than the market average, translating into about $39.1 million of additional revenue.“

HIGHLIGHTS — RECENT DEVELOPMENTS

Dividend of $0.05 per share of common stock

On August 9, 2017, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the second quarter of 2017 of $0.05 per share of common stock. The dividend is payable on September 14, 2017 to stockholders of record as of September 7, 2017. 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.

Time charter coverage and commitments

Navios Acquisition currently owns 36 vessels, of which eight are VLCCs, 26 are product tankers and two are chemical tankers.

As of August 10, 2017, Navios Acquisition had contracted 94.0% of its available days on a charter-out basis for 2017, expecting to generate revenues of approximately $194.5 million. The average contractual net daily charter-out rate for the fleet is expected to be $17,660.

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 six months ended June 30, 2017 and 2016. The quarterly information for 2017 and 2016 was derived from the unaudited condensed consolidated financial statements for the respective periods.

(Expressed in thousands of U.S. dollars) Three

Month

Period

ended

June 30,

2017

(unaudited)

Three

Month

Period

ended

June 30,

2016

(unaudited)

Six Month

Period

ended

June 30,

2017

(unaudited)

Six Month

Period

ended

June 30,

2016

(unaudited)

Revenue $ 58,458 $ 74,495 $ 122,940 $ 154,914
Adjusted EBITDA $ 27,080 (1 ) $ 45,450 ( 2 ) $ 64,461 (1 ) $ 101,200 ( 2 )
Net (loss)/ income $ (64,417 ) $ 12,184 $ (58,802 ) $ 35,954
Adjusted net (loss)/ income (1) $ (4,617 (1) $ 12,448 ( 2 ) $ 998 (1 ) $ 34,414 ( 2 )
(Loss)/ income per share (basic) $ (0.41 ) $ 0.08 $ (0.37 ) $ 0.23
Adjusted (loss)/earnings per share (basic) (1) $ (0.03 ) $ 0.08 $ 0.01 $ 0.22

 

(1) Adjusted EBITDA, Adjusted net loss and Adjusted loss per share (basic) for the three and six month period ended June 30, 2017 in this document exclude $59.1 million of non-cash impairment loss on equity investment in Navios Maritime Midstream Partners L.P. (“Navios Midstream”).
Furthermore, Adjusted net loss and Adjusted net loss per share (basic) for the three and six month period June 30, 2017 further exclude a $0.7 million write-off of deferred finance cost.
(2) Adjusted EBITDA, Adjusted net income and Adjusted earnings per share (basic) for the three month period ended June 30, 2016 in this document exclude non-cash stock-based compensation of $0.3 million.
Adjusted EBITDA, Adjusted net income and Adjusted earnings per share (basic) for the six month period ended June 30, 2016 in this document exclude gain on sale of vessel of $2.3 million and non-cash stock-based compensation of $0.5 million. Adjusted net income and Adjusted earnings per share (basic) further exclude a $0.2 million write-off of deferred finance cost.

Adjusted 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 Adjusted EBITDA).

Three month periods ended June 30, 2017 and 2016

Revenue for the three month period ended June 30, 2017 decreased by $16.0 million, or 21.5%, to $58.5 million, as compared to $74.5 million for the same period of 2016. The decrease was mainly attributable to the: (i) decrease in the market rates during the second quarter ended June 30, 2017, as compared to the same period in 2016; and (ii) decrease in revenue by $3.3 million due to the sale of two chemical tankers in the fourth quarter of 2016. Available days of the fleet decreased to 3,256 days for the three month period ended June 30, 2017, as compared to 3,437 days for the three month period ended June 30, 2016. The time charter equivalent rate, or TCE Rate, decreased to $17,491 for the three month period ended June 30, 2017, from $21,380 for the three month period ended June 30, 2016.

On June 30, 2017, the Company recognized a $59.1 million non-cash impairment loss on its equity investment in Navios Midstream.

Adjusted EBITDA for the three month period ended June 30, 2017 excludes the impairment loss of $59.1 million in equity investment in Navios Midstream. Adjusted EBITDA for the three month period ended June 30, 2017 decreased by approximately $18.4 million to $27.1 million as compared to $45.5 million for the same period of 2016. The decrease in Adjusted EBITDA was mainly due to a: (a) $16.0 million decrease in revenue, as described above; (b) $4.6 million increase in time charter expenses mainly due to the $4.1 million accrued backstop commitment to Navios Midstream; and (c) $2.4 million decrease in equity/ (loss) in net earnings of affiliated companies, partially mitigated by a; (i) $2.0 million decrease in general and administrative expenses (excluding share-based compensation expense); (ii) $1.2 million decrease in other income/ (expense), net; (iii) $0.7 million decrease in direct vessel expenses (excluding amortization of dry dock and special survey costs); and (iv) $0.6 million decrease in management fees, mainly due to the sale of two chemical tankers in the fourth quarter of 2016, as discussed above.

Net loss for the three month period ended June 30, 2017 was adjusted to exclude the $59.1 million impairment loss, described above, and $0.7 million write-off of deferred finance cost. Adjusted net loss for the three month period ended June 30, 2017 decreased by $17.1 million to $4.6 million loss as compared to $12.4 million income for the same period of 2016. The decrease was due to : (a) a $18.4 million decrease in Adjusted EBITDA; (b) a $0.3 million increase in direct vessel expenses; and (c) a $0.2 million increase in interest expense and finance cost partially mitigated by a: (i) $1.7 million increase in interest income; and (ii) $0.1 million decrease in depreciation and amortization.

Six month periods ended June 30, 2017 and 2016

Revenue for the six month period ended June 30, 2017 decreased by $32.0 million, or 20.6%, to $122.9 million, as compared to $154.9 million for the same period of 2016. The decrease was mainly attributable to the: (i) decrease in the market rates during the six month period ended June 30, 2017, as compared to the same period in 2016; and (ii) decrease in revenue by $7.0 million due to the sale of one MR2 product tanker in January 2016 and two chemical tankers in the fourth quarter of 2016. Available days of the fleet decreased to 6,463 days for the six month period ended June 30, 2017, as compared to 6,914 days for the six month period ended June 30, 2016. The TCE Rate decreased to $18,475 for the six month period ended June 30, 2017, from $22,055 for the six month period ended June 30, 2016.

Adjusted EBITDA for the six month period ended June 30, 2017, adjusted to exclude the $59.1 million impairment loss, as discussed above and decreased by approximately $36.7 million to $64.5 million as compared to $101.2 million for the same period of 2016. The decrease in Adjusted EBITDA was mainly due to a: (a) $32.0 million decrease in revenue, as described above; (b) $6.3 million increase in time charter expenses mainly due to the $5.2 million accrued backstop commitment to Navios Midstream; and (c) $4.5 million decrease in equity/ (loss) in net earnings of affiliated companies, partially mitigated by a; (i) $2.5 million decrease in general and administrative expenses (excluding share-based compensation expense); (ii) $1.4 million decrease in management fees, mainly due to the sale of one MR2 product tanker in January 2016 and two chemical tankers in the fourth quarter of 2016; (iii) $1.4 million decrease in other expense, net; and (iv) $0.7 million decrease in direct vessel expenses (excluding amortization of dry dock and special survey costs).

Net income for the six month period ended June 30, 2017 was adjusted to exclude the $59.1 million impairment loss, described above, and $0.7 million write-off of deferred finance cost. Adjusted net income for the six month period ended June 30, 2017 decreased by $33.4 million to $1.0 million as compared to $34.4 million for the same period of 2016. The decrease was due to a: (a) $36.7 million decrease in Adjusted EBITDA; (b) $0.5 million increase in direct vessel expenses; and (c) $0.1 million increase in interest expense and finance cost; partially mitigated by a: (i) $3.2 million increase in interest income; and (ii) $0.7 million decrease in depreciation and amortization.

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