Navios Acquisition sees second-quarter profits drop

Navios_Frangou

Navios Maritime Acquisition Corporation (“Navios Acquisition”) (NNA), an owner and operator of tanker vessels, reported its financial results for the second quarter and the six month period ended June 30, 2016.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “Navios Acquisition reported net income of $12.2 million or $0.08 per share for the second quarter of 2016 and $36.0 million or $0.23 per share for the first half of 2016. This included $1.3 million of profit sharing in the second quarter of 2016 of a total of $7.4 million in the first half of 2016. We declared a dividend of $0.05 per share for the quarter, resulting in a dividend yield of about 13% on an annualized basis.”

Angeliki Frangou continued, “NNA has 38 vessels with an average age of 5.4 years, all of which are generating cash flow. Our fleet is 98.2% fixed for 2016 and 56.6% fixed for 2017, and our operating costs are fixed through mid-2018, at rates that are about 11% below industry average through our operating agreements with Navios Holdings.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Dividend of $0.05 per share of common stock

On August 10, 2016, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the second quarter of 2016 of $0.05 per share of common stock. The dividend is payable on September 21, 2016 to stockholders of record as of September 14, 2016 and provides a current annualized yield of 12.7%.

Profit sharing

During the second quarter of 2016, Navios Acquisition benefited from the healthy spot market and earned $1.3 million under its profit sharing arrangements. Profit sharing recognized for the six months ended June 30, 2016 was $7.4 million.

Time Charter Coverage

Navios Acquisition currently owns 38 vessels, of which eight are VLCCs, 26 are product tankers and four are chemical tankers which include the two vessels, the Nave Constellation, a 2013-built chemical tanker of 45,281 dwt, and the Nave Universe, a 2013-built chemical tanker of 45,513 dwt, that Navios Acquisition has agreed to sell following the completion of their chartering commitments, expected during the second half of 2016.

As of August 18, 2016, Navios Acquisition had contracted 98.2% and 56.6% of its available days on a charter-out basis for 2016 and 2017, respectively, expecting to generate revenues of approximately $256.9 million and $118.7 million, respectively. The average contractual daily charter-out rate for the fleet is expected to be $20,679 and $21,020 for 2016 and 2017, respectively.

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, 2016 and 2015. The quarterly information for 2016 and 2015 was derived from the unaudited condensed consolidated financial statements for the respective periods.

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(1) 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. Net income and Earnings per share (basic) have been further adjusted to exclude $0.2 million write-off of deferred finance cost.

Adjusted EBITDA, Adjusted net income and Adjusted earnings (basic) for the three month period ended June 30, 2015 in this document exclude stock-based compensation of $0.7 million and gain on sale of vessels of $5.8 million. Net income and Earnings per share (basic) have been further adjusted to exclude $0.8 million write off of deferred finance cost and debt prepayment expenses.

Adjusted EBITDA, Adjusted net income and Adjusted earnings (basic) for the six month period ended June 30, 2015 in this document exclude stock-based compensation of $1.3 million and gain on sale of vessels of $5.8 million. Net income and Earnings per share (basic) have been further adjusted to exclude $0.8 million write off of deferred finance cost and debt prepayment expenses.

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

Three month periods ended June 30, 2016 and 2015

Revenue for the three month period ended June 30, 2016 decreased by $5.9 million or 7.4% to $74.5 million, as compared to $80.4 million for the same period of 2015. The decrease was mainly attributable to: (i) the decrease in profit sharing by $7.2 million to $1.3 million recognized in the three month period ended June 30, 2016, as compared to $8.6 million for the same period in 2015; and (ii) the decrease in revenue by $6.9 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 the deliveries of two vessels from April 2015 until June 30, 2016. Available days of the fleet decreased to 3,437 days for the three month period ended June 30, 2016, as compared to 3,523 days for the three month period ended June 30, 2015. The TCE Rate decreased to $21,380 for the three month period ended June 30, 2016, from $22,541 for the three month period ended June 30, 2015.

EBITDA for the three month period ended June 30, 2016 decreased by $15.2 million to $45.2 million from $60.4 million in the same period of 2015. The decrease in EBITDA was mainly due to: (i) a $5.9 million decrease in revenue; (ii) $5.8 million of gain from sale of vessels recognized in the three month period ended June 30, 2015; (iii) a $2.1 million increase in general and administrative expenses; (iv) a $0.8 million increase in other expense, net; and (v) $0.7 million increase in direct vessel expenses (excluding amortization of dry dock and special survey costs), partially mitigated by a $0.1 million increase in equity in net earnings of affiliated companies.

Net income for the three month period ended June 30, 2016, decreased by approximately $14.2 million to $12.2 million compared to $26.4 million, for the same period in 2015. The decrease was due to: (i) a decrease of $15.2 million in EBITDA; and (ii) an increase of $0.3 million in amortization of dry docking and special survey costs included in direct vessel expenses. The decrease was partially mitigated by: (a) an increase of $0.6 million in interest income; (b) a decrease of $0.6 million in depreciation and amortization; and (c) a decrease of $0.2 million in interest expense and finance cost.

Six month periods ended June 30, 2016 and 2015

Revenue for the six month period ended June 30, 2016 decreased by $4.1 million or 2.6% to $154.9 million, as compared to $159.0 million for the same period of 2015. The decrease was mainly attributable to: (i) the decrease in profit sharing by $8.8 million to $7.4 million recognized in the six month period ended June 30, 2016, as compared to $16.2 million for the same period in 2015; and (ii) the decrease in revenue by $14.7 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 June 30, 2016. Available days of the fleet decreased to 6,914 days for the six month period ended June 30, 2016, as compared to 6,961 days for the six month period ended June 30, 2015. The TCE Rate slightly decreased to $22,055 for the six month period ended June 30, 2016, from $22,531 for the six month period ended June 30, 2015.

EBITDA for the six month period ended June 30, 2016 decreased by $10.7 million to $103.0 million from $113.6 million in the same period of 2015. The decrease in EBITDA was mainly due to: (i) a $4.1 million decrease in revenue; (ii) the decrease in the gain on sale of vessels by $3.5 million; (iii) a $2.4 million increase in general and administrative expenses; (iv) a $1.0 million increase in other expense, net; (v) a $0.3 million increase in time charter expenses; (vi) a $0.2 million increase in management fees; and (vii) $0.7 million increase in direct vessel expenses (excluding amortization of dry dock and special survey costs), partially mitigated by a $1.5 million increase in equity in net earnings of affiliated companies.

Net income for the six month period ended June 30, 2016 decreased by $10.4 million to $36.0 million from $46.4 million for the same period of 2015. The decrease was due to: (i) a decrease of $10.7 million in EBITDA; (ii) an increase of $0.7 million in interest expense and finance cost; and (iii) an increase of $0.6 million in amortization of dry docking and special survey costs included in direct vessel expenses. The decrease was partially mitigated by: (a) an increase of $1.0 million in interest income; and (b) a decrease of $0.6 million in depreciation and amortization.

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