Navios Containers extends charters on two of its largest containerships

Navios_Frangou

Navios Containers, a growth vehicle dedicated to the container sector of the maritime industry, reported its financial results for the third quarter and nine months ended September 30, 2019.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results for the third quarter of 2019. Navios Containers reported $37.0 million of revenue, $16.6 million of EBITDA and $4.1 million of net income. Navios Containers also reported earnings per unit of 12 cents.”

Angeliki Frangou continued, “We believe that Navios Containers is well-positioned going into 2020. It enjoys materially improved charter rates, with current market rates having increased by almost 70% since the first quarter of 2019. Navios Containers also benefits from fixed operating costs and attractive financing.​”

HIGHLIGHTS — RECENT DEVELOPMENTS

Revenue Visibility – Time charters of two 10,000 TEU vessels extended through 2024

In September 2019, Navios Containers agreed to extend the time charters of the Navios Unison, a 2010-built 10,000 TEU containership, and the Navios Constellation, a 2011-built 10,000 TEU containership, at $27,300 per day net until May 2024. Following such extension, an additional cumulative EBITDA of approximately $30.0 million is expected for both vessels.

Vessels additional EBITDA is calculated as follows: (i) revenue at contracted net charter rate per day based on 360 days less, (ii) operating expenses based on new fixed rates as per management agreement and (iii) general and administrative expenses approximating current costs based on 365 days.

Renewal of Management and Administrative Agreement

In August 2019, the Company entered into an amendment to the Management Agreement (as amended, the “Management Agreement”) with Navios Shipmanagement Inc.

Under the Management Agreement:

  • The duration of the Management Agreement is extended until January 1, 2025.
  • The Company’s fixed rates which cover all technical and commercial management services and operating costs, other than dry-docking, are renewed for a two-year period commencing January 1, 2020. These rates, represent a weighted average increase of 3% compared to the fixed rates of the period up to December 31, 2019, based on Navios Containers’ current fleet mix. A $50 daily fee per vessel is charged for technical and commercial management services, commencing January 1, 2020.
  • The above mentioned rates are subject to an annual increase of 3%, unless otherwise agreed, commencing January 1, 2022.

In August 2019, the Company entered into an amendment to the Administrative Services Agreement (as amended, the “Administrative Agreement”) with Navios Shipmanagement Inc. to extend the duration of the Administrative Agreement until January 1, 2025, with an automatic renewal for an additional five years, unless earlier terminated by either party.

Fleet Employment

Navios Containers owns a fleet of 29 vessels, totaling 142,821 TEU. The current average age of the fleet is 11.3 years (See Exhibit II). As of October 25, 2019, Navios Containers has chartered-out 87.7% and 27.7% of available days for the remainder of 2019 and for 2020, respectively (excluding index-linked charters), which are expected to generate $36.7 million and $57.4 million in revenue, respectively. The average expected daily contracted charter-out rate for the fleet is $15,690 and $19,549 for the remainder of 2019 and for 2020, respectively, and the total expected available days for the remainder of 2019 and for 2020, are 2,668 days and 10,614 days, respectively.

Earnings Highlights

EBITDA is a non-U.S. GAAP financial measure and should not be used in isolation or as a substitute for Navios Containers’ results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

See Exhibit I under the heading, “Disclosure of Non-GAAP Financial Measures,” for a discussion of EBITDA of Navios Containers and a reconciliation of such measure to the most comparable measures calculated under U.S. GAAP.

On November 30, 2018, in connection with our listing on the Nasdaq Global Select Market, we converted into a limited partnership at a ratio of one common share of Navios Maritime Containers Inc. for each common unit of Navios Containers.

Third Quarter 2019 and 2018 Results

The third quarter 2019 and 2018 information presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

Three Month Period
Ended

September 30, 2019
Three Month Period
Ended

September 30, 2018
(in thousands of U.S. dollars, except per unit data) (unaudited) (unaudited)
Revenue $ 37,031 $ 38,080
Net Income $ 4,071 $ 5,414
Net cash provided by operating activities $ 14,988 $ 18,261
EBITDA $ 16,641 $ 19,236
Net Earnings per common unit (basic and diluted) $ 0.12 $ 0.16

Revenue for the three months ended September 30, 2019 was $37.0 million, as compared to $38.1 million for the same period during 2018. The decrease of $1.1 million was mainly due to the decrease in time charter rates reflecting primarily the expiration of certain legacy time charter contracts, partially offset by the increase in the number of vessels operating during the three months ended September 30, 2019 and the resulting increase in the number of available days from 2,242 for the three months ended September 30, 2018, to 2,646 for the three months ended September 30, 2019. TCE per day declined from $16,518 for the three months ended September 30, 2018 to $13,453 for the same period during 2019, primarily as a result of the expiration of contracts between the two periods.

Net Income for the three months ended September 30, 2019 was $4.1 million compared to $5.4 million for the same period in 2018. The $1.3 million decrease in Net Income was mainly due to a: (i) $2.6 million decrease in EBITDA; (ii) $0.8 million increase in interest expense and finance cost, net related to the financing of new vessels; and (iii) $0.6 million increase in amortization of deferred drydock and special survey costs, in each case, relating to the increase in the size of the fleet. This overall decrease of $4.0 million was partially offset by a $2.7 million decrease in depreciation and amortization expenses, relating mainly to the lower amortization of intangible assets.

EBITDA for the three months ended September 30, 2019 decreased by $2.6 million to $16.6 million as compared to $19.2 million for the same period in 2018. The decrease in EBITDA was primarily due to a: (i) $2.3 million increase in management fees mainly due to the increase of the available days from 2,242 days for the three months ended September 30, 2018, to 2,646 days for the three months ended September 30, 2019; (ii) $1.1 million decrease in revenue; (iii) $0.7 million increase in general and administrative expenses mainly related to the growth in our fleet; (iv) $0.5 million decrease in other income, net; and (v) $0.4 million increase in time charter and voyage expenses.  This overall decrease of $5.0 million was partially offset by a $2.4 million decrease in listing transaction related-expenses.

Nine Months Ended September 30, 2019 and 2018 Results

The information for the nine months ended September 30, 2019 and 2018 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

Nine Month Period
Ended
September 30, 2019
Nine Month Period
Ended

September 30, 2018
(in thousands of U.S. dollars, except per unit data) (unaudited) (unaudited)
Revenue $ 102,541 $ 99,505
Net Income $ 4,572 $ 12,942
Net cash provided by operating activities $ 24,309 $ 37,874
EBITDA $ 41,419 $ 51,599
Net Earnings per common unit (basic and diluted) $ 0.13 $ 0.39

Revenue for the nine months ended September 30, 2019 was $102.5 million, as compared to $99.5 million for the same period during 2018. The increase of $3.0 million was mainly due to the increase in the number of vessels operating during the nine months ended September 30, 2019 and the resulting increase in the number of available days from 6,161 for the nine months ended September 30, 2018, to 7,685 for the nine months ended September 30, 2019, partially offset by the decrease in time charter rates reflecting primarily the expiration of certain legacy time charter contracts. TCE per day declined from $15,733 for the nine months ended September 30, 2018 to $12,768 for the same period during 2019, primarily as a result of the expiration of these contracts between the two periods.

Net Income for the nine months ended September 30, 2019 was $4.6 million compared to $12.9 million for the same period in 2018. The $8.3 million decrease in Net Income was mainly due to a: (i) $10.2 million decrease in EBITDA; (ii) $5.3 million increase in interest expense and finance cost, net related to the financing of new vessels; and (iii) $1.7 million increase in amortization of deferred drydock and special survey costs, in each case, relating to the increase in the size of the fleet. This overall resulting decrease of $17.2 million was partially offset by an $8.9 million decrease in depreciation and amortization expenses, relating mainly to the lower amortization of intangible assets.

EBITDA for the nine months ended September 30, 2019 decreased by $10.2 million to $41.4 million as compared to $51.6 million for the same period in 2018. The decrease in EBITDA was primarily due to a: (i) $10.3 million increase in management fees mainly due to the increase of the available days from 6,161 days for the nine months ended September 30, 2018, to 7,685 days for the nine months ended September 30, 2019; (ii) $ 2.6 million increase in general and administrative expenses mainly related to the growth in our fleet; (iii) $1.8 million increase in time charter and voyage expenses; (iv) $0.7 million decrease in other income, net; and (v) $0.2 million increase in other direct vessel expenses. This overall resulting decrease of $15.6 million was partially offset by a: (i) $3.0 million increase in revenue described above reflecting the growth in the number of vessels operating in the fleet during the period; and (ii) $2.4 million decrease in listing transaction related-expenses.

Fleet Summary Data:

The following table reflects certain key indicators indicative of the performance of the Navios Containers’ operations and its fleet performance for the three and nine months ended September 30, 2019 and 2018.

Three Month   Three Month   Nine Month Nine Month
Period Ended   Period Ended   Period Ended Period Ended
September 30,   September 30,   September 30, September 30,
2019   2018   2019 2018
(unaudited)   (unaudited)   (unaudited) (unaudited)
Available Days (1) 2,646 2,242 7,685 6,161
Operating Days (2) 2,632 2,218 7,658 6,075
Fleet Utilization (3) 99.5 % 98.9 % 99.6 % 98.6 %
Vessels operating at period end 29 26 29 26
TCE (4) $ 13,453 $ 16,518 $ 12,768 $ 15,733
(1 ) Available days for the fleet are total calendar days the vessels were in Navios Containers’ possession for the relevant period after subtracting off-hire days associated with scheduled repairs or repairs under guarantee, vessel upgrades, drydocking or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.
(2 ) Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.
(3 ) Fleet utilization is the percentage of time that Navios Containers’ vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels.
(4 ) TCE is defined as voyage and time charter revenues less voyage expenses during a relevant period divided by the number of available days during the period.

 

LEAVE A COMMENT

×

Comments are closed.