Navios Acquisition: “We are pleased with our results for the third quarter of 2017″ – Frangou

Angeliki Frangou

Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results for the third quarter and the nine month period ended September 30, 2017.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “We are pleased with our results for the third quarter of 2017, where we reported revenue of $54.0 million and EBITDA of $23.3 million. We also declared a dividend of $0.05 per share for the quarter, resulting in a dividend yield of about 16.0%.”

Angeliki Frangou continued, “The recent volatility in the price of oil and continued uncertainty in the outlook has adversely affected transportation. However, our long-term chartering strategy insulates us somewhat from this volatility.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Cash inflow of $55.1 million expected in the fourth quarter of 2017 from early repayment of loan to Navios Maritime Holdings Inc. (“Navios Holdings”)

In October 2017, Navios Holdings notified Navios Acquisition of its intention to fully prepay the loan facility entered into on September 19, 2016 with a payment of $55.1 million in the fourth quarter of 2017. The prepayment amount will consist of the $50.0 million drawn under the loan facility entered into with Navios Holdings and $5.1 million of accrued interest.

Dividend of $0.05 per share of common stock

On October 25, 2017, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2017 of $0.05 per share of common stock. The dividend is payable on December 12, 2017 to stockholders of record as of December 6, 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 November 2, 2017, Navios Acquisition had contracted 98.8% of its available days on a charter-out basis for 2017, which is expected to generate revenues of approximately $208.2 million. The average contractual net daily charter-out rate for the fleet is expected to be $17,312.

FINANCIAL HIGHLIGHTS

For the following results and the selected financial data presented herein, Navios Acquisition has compiled its consolidated statements of operations for the three and nine months ended September 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
September 30,
2017
(unaudited)
Three Month
Period ended
September 30,
2016
(unaudited)
Nine Month
Period ended
September 30,
2017
(unaudited)
Nine Month
Period ended
September 30,
2016
(unaudited)
Revenue $ 54,021 $ 68,069 $ 176,961 $ 222,983
Net (loss)/income $ (8,105 ) $ 8,817 $ (66,907 ) $ 44,771
Adjusted net (loss)/ income $ (8,105 ) $ 9,084 (2) $ (7,107 )(1) $ 43,498 (2)
Net cash provided by operating
activities
$ 22,509 $ 40,104 $ 55,648 $ 90,341
EBITDA $ 23,303 $ 41,706 $ 28,660 $ 144,660
Adjusted EBITDA $ 23,303 $ 41,973 (2) $ 87, 764 (1) $ 143,173 (2)
(Loss)/income per share (basic) $ (0.05 ) $ 0.06 $ (0.42 ) $ 0.28
Adjusted (loss)/income per share (basic) $ (0.05 ) $ 0.06 (2) $ (0.04 )(1) $ 0.28 (2)

(1) Adjusted EBITDA, Adjusted net loss and Adjusted loss per share (basic) for the nine month period ended September 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”).

In addition, Adjusted net loss and Adjusted net loss per share (basic) for the nine month period September 30, 2017 further exclude a $0.7 million write-off of deferred finance cost.

(2) Adjusted EBITDA, Adjusted net income and Adjusted income per share (basic) for the three month period ended September 30, 2016 in this document exclude non-cash stock-based compensation of $0.3 million.

Adjusted EBITDA, Adjusted net income and Adjusted income per share (basic) for the nine month period ended September 30, 2016 in this document exclude gain on sale of vessel of $2.3 million and non-cash stock-based compensation of $0.8 million. Adjusted net income and Adjusted income per share (basic) further exclude a $0.2 million write-off of deferred finance cost.

EBITDA, Adjusted EBITDA, Adjusted net (loss)/income and Adjusted (loss)/income per share (basic) are 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 and Adjusted EBITDA).

Three month periods ended September 30, 2017 and 2016

Revenue for the three month period ended September 30, 2017 decreased by $14.0 million, or 20.6%, to $54.0 million, as compared to $68.1 million for the same period of 2016. The decrease was mainly attributable to a: (i) decrease in the market rates during the third quarter ended September 30, 2017, as compared to the same period in 2016; and (ii) decrease in revenue by $3.1 million due to the sale of two chemical tankers in the fourth quarter of 2016. Available days of the fleet decreased to 3,215 days for the three month period ended September 30, 2017, as compared to 3,496 days for the three month period ended September 30, 2016. The time charter equivalent rate, or TCE Rate, decreased to $16,486 for the three month period ended September 30, 2017, from $19,159 for the three month period ended September 30, 2016.

Net loss for the three month period ended September 30, 2017 decreased by $16.9 million to $8.1 million net loss as compared to $8.8 million net income for the same period of 2016. The decrease was due to a: (a) $18.7 million decrease in Adjusted EBITDA; and (b) $0.3 million increase in direct vessel expenses; partially mitigated by a: (i) $1.7 million increase in interest income; (ii) $0.3 million share based compensation expense incurred in the third quarter ended September 30, 2016; and (iii) $0.1 million decrease in interest expense and finance cost.

Adjusted EBITDA for the three month period ended September 30, 2017 decreased by approximately $18.7 million to $23.3 million as compared to $42.0 million for the same period of 2016. The decrease in Adjusted EBITDA was mainly due to a: (a) $14.0 million decrease in revenue, as described above; (b) $5.9 million increase in time charter expenses mainly due to the accrued backstop commitment to Navios Midstream; and (c) $0.6 million increase in other expense, net, partially mitigated by a: (i) $1.2 million decrease in management fees, mainly due to the sale of two chemical tankers in the fourth quarter of 2016, as discussed above; (ii) $0.6 million increase in equity in net earnings of affiliated companies; and (iii) $0.1 million decrease in general and administrative expenses (excluding the share-based compensation expense).

Nine month periods ended September 30, 2017 and 2016

Revenue for the nine month period ended September 30, 2017 decreased by $46.0 million, or 20.6%, to $177.0 million, as compared to $223.0 million for the same period of 2016. The decrease was mainly attributable to a: (i) decrease in the market rates during the nine month period ended September 30, 2017, as compared to the same period in 2016; and (ii) decrease in revenue by $10.1 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 9,678 days for the nine month period ended September 30, 2017, as compared to 10,410 days for the nine month period ended September 30, 2016. The TCE Rate decreased to $17,814 for the nine month period ended September 30, 2017, from $21,082 for the nine month period ended September 30, 2016.

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

Net loss for the nine month period ended September 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 nine month period ended September 30, 2017 decreased by $50.6 million to $7.1 million net loss as compared to $43.5 million net income for the same period of 2016. The decrease was due to a: (a) $55.4 million decrease in Adjusted EBITDA; (b) $0.8 million increase in direct vessel expenses; partially mitigated by a: (i) $4.9 million increase in interest income; and (ii) $0.7 million decrease in depreciation and amortization.

Adjusted EBITDA for the nine month period ended September 30, 2017 excludes the $59.1 million impairment loss, as discussed above, and decreased by $55.4 million to $87.8 million as compared to $143.2 million for the same period of 2016. The decrease in Adjusted EBITDA was mainly due to a: (a) $46.0 million decrease in revenue, as described above; (b) $12.3 million increase in time charter expenses mainly due to the $11.2 million accrued backstop commitment to Navios Midstream; and (c) $3.9 million decrease in equity/ (loss) in net earnings of affiliated companies, partially mitigated by a: (i) $2.7 million decrease in general and administrative expenses (excluding the share-based compensation expense); (ii) $2.6 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) $0.8 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).

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 month periods ended September 30, 2017 and 2016.

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