Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results for the first quarter ended March 31, 2019.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “I am pleased to report that for the first quarter of 2019, Navios Acquisition recorded revenue of $77.1 million, EBITDA of $41.7 million and net income of $0.9 million. We declared a quarterly distribution of $0.30 per share for Q1, and repurchased about 735,000 shares since the program was initiated, together providing a total annualized return of about 22%.”
Angeliki Frangou continued, “We began to renew our fleet a couple of years ago when asset values were weak. We are selling older vessels for scrap and committing to new bareboat charters. We recently sold two vessels over 18 years of age and exercised an option to bareboat-in a third new Japanese-built VLCC with an implied purchase price of $84.5 million. The VLCC is expected to deliver to our fleet in Q3 2021 with a bareboat charter for 12 years and de-escalating purchase options.“
HIGHLIGHTS — RECENT DEVELOPMENTS
Quarterly dividend: $0.30 per share
On May 10, 2019, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2019 of $0.30 per share of common stock which will be paid on June 27, 2019 to stockholders of record as of May 29, 2019. 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.
Exercised our option for VLCC newbuilding under bareboat lease
In the first quarter of 2019, we exercised our option for a third VLCC newbuilding under a bareboat operating lease with an expected delivery in the third quarter of 2021.
Navios Acquisition has agreed to the main terms of a 12-year bareboat charter-in agreement with de-escalating purchase options for one newbuild Japanese VLCC. The bareboat charter-in 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.
Sale of two VLCCs
On March 25, 2019, Navios Acquisition sold the C. Dream, a 2000-built VLCC vessel of 298,570 dwt to an unaffiliated third party for a sale price of $21.8 million. The gain on sale of the vessel amounted to $0.7 million.
In April 2019, Navios Acquisition sold the Shinyo Ocean, a 2001-built VLCC vessel of 281,395 dwt to an unaffiliated third party for a sale price of $12.5 million. Unrepaired damages plus expenses incurred since the incident covering the fair market value of the vessel are recovered by insurance (subject to applicable deductibles and other customary limitations).
Sale and leaseback agreement
In March and April 2019, Navios Acquisition entered into sale and lease back agreements each for $103.2 million in order to refinance $50.3 million outstanding on the existing facility on three product tankers and to finance two product tankers for which their previous credit facility was fully prepaid in March 2019 in an amount of $32.2 million. The agreements will be repayable in 28 equal consecutive quarterly installments of $2.3 million each, with a repurchase obligation of $39.7 million on the last repayment date. The agreements each mature in March and April 2026 and bear interest at LIBOR plus 350 bps per annum.
Stock repurchase program
As of May 12, 2019, Navios Acquisition had repurchased 735,251 shares since program was initiated for approximately $7.5 million, under the $25.0 million stock repurchase program, being 5.4% of the current fully diluted shares.
As of May 13, 2019, our fleet consisted of a total of 42 vessels, of which 11 are VLCCs, 26 are product tankers, two are chemical tankers and three are bareboat VLCC chartered-in vessels to be delivered in the third and fourth quarters of 2020 and third quarter of 2021.
Currently, Navios Acquisition has contracted 77.1% of its available days on a charter-out basis for 2019, which are expected to generate revenues of approximately $172.2 million for 2019. The average contractual net daily charter-out rate for the 59.4% of available days that are contracted on base rate and/or base rate with profit sharing arrangements are expected to be $18,807.
Three month periods ended March 31, 2019 and 2018
Revenue for the three month period ended March 31, 2019 increased by $31.0 million, or 67.1%, to $77.1 million, as compared to $46.2 million for the same period of 2018. The increase was mainly attributable to an: (i) increase in revenue by $20.3 million due to the acquisition and resulting consolidation of Navios Midstream; and (ii) increase in market rates during the first quarter ended March 31, 2019 as compared to the same period of 2008. Available days of the fleet increased to 3,683 days for the three month period ended March 31, 2019, as compared to 3,181 days for the three month period ended March 31, 2018, as a result of the merger with Navios Midstream effective as of December 13, 2018. The time charter equivalent rate, or TCE Rate, increased to $19,643 for the three month period ended March 31, 2019, from $14,205 for the three month period ended March 31, 2018.
Time charter and voyage expenses for the three month period ended March 31, 2019 decreased by approximately $1.1 million, or 18.2%, to $4.8 million, as compared to $5.8 million for the same period of 2018. The decrease was mainly attributable to a: (a) $4.9 million decrease in the backstop commitment; partially mitigated by a: (i) $3.1 million increase in bunkers consumption and voyage expenses due to spot voyages incurred in the period; and (ii) $0.7 million increase in brokers’ commission.
Net income for the three month period ended March 31, 2019 was $0.9 million as compared to $24.5 million loss for the same period of 2018. The increase in net income was due to a: (a) $32.9 million increase in EBITDA; and (b) $0.3 million increase in interest income; partially mitigated by a: (i) $3.5 million increase in depreciation and amortization, due to the acquisition of Navios Midstream on December 13, 2018; (ii) $3.6 million increase in interest expense and finance cost, net of deferred finance cost; and (iii) $0.8 million increase in direct vessel expenses.
EBITDA for the three month period ended March 31, 2019 increased by $32.9 million to $41.7 million, as compared to $8.8 million for the same period of 2018. The increase in EBITDA was mainly due to a: (a) $31.0 million increase in revenue; (b) $5.1 million increase in equity /(loss) in net earnings of affiliated companies; (c) $1.6 million increase in other income/ (expense), net; (d) $1.1 million decrease in time charter and voyage expenses, as described above; (e) $0.6 million gain on sale of vessels; (f) $0.3 million decrease in other expense; partially mitigated by a: (i) $4.5 million increase in management fees due to the acquisition of Navios Midstream on December 13, 2018 and to the amendment of the fees under the Management Agreement; and (ii) $2.0 million increase in general and administrative expenses mainly due to expenses incurred in connection with the acquisition of Navios Midstream on December 13, 2018.