Navios Containers Reports 2018 Net Income of $17.7 million

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Navios Maritime Containers L.P., a growth vehicle dedicated to the container sector of the maritime industry, reported financial results for the fourth quarter and year ended December 31, 2018.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results for the full year and fourth quarter of 2018. For the full year, Navios Containers reported $69.3 million of adjusted EBITDA and $17.7 million of adjusted net income. For the fourth quarter, we reported $15.3 million of adjusted EBITDA and $2.4 million of adjusted net income.”

Angeliki Frangou continued, “NMCI has grown its fleet to 30 containerships. Our investment in our fleet is split roughly equally into Baby Panamax and Neo Panamax vessels, offering an attractive mix of potential in cash yield and capital appreciation, as the Neo Panamaxes provide cash flow while our initial investment thesis in the Baby Panamax comes to fruition. ”

HIGHLIGHTS — RECENT DEVELOPMENTS

Direct Listing on the Nasdaq Global Select Market

Navios Containers commenced trading on the Nasdaq Global Select Market on December 10, 2018 under the ticker symbol “NMCI”. The Nasdaq listing represents another important milestone that reflects the Company’s commitment to all its stakeholders.

Vessel Acquisitions

$52.5 million acquisition of one 10,000 TEU, 2011-built containership

In January 2019, Navios Containers exercised an option to acquire a 2011-built 10,000 TEU containership from an unrelated third party for a purchase price of $52.5 million. The containership is chartered out at a net rate of $26,325 per day until November 2020 and $27,300 per day until October 2021, and is expected to be delivered in the first quarter of 2019.

The acquisition is expected to be financed with a: (i) loan of up to $31.8 million from a commercial bank maturing in July 2023 and bearing interest at LIBOR plus 325 bps per annum; (ii) $15.0 million credit by the seller for a period until December 31, 2019 at a rate of 5.0% per annum; and (iii) cash on balance sheet.

Option to acquire one 10,000 TEU, 2011-built containership

Navios Containers entered into an agreement where it has the option to acquire one 2011-built 10,000 TEU containership from an unrelated third party for a purchase price of $52.5 million. The Company has until March 2019 to exercise the option and would expect to take delivery of the containership in the second quarter of 2019.

The acquisition is expected to be financed with a: (i) a loan of up to $31.8 million from a commercial bank maturing in July 2023 and bearing interest at LIBOR plus 325 bps per annum, (ii) $5.0 million credit by the seller and (iii) cash from balance sheet. The acquisition is subject to certain conditions, and there can be no assurances that this acquisition or the related financings will occur in whole or in part.

The two 10,000 TEU containerships are expected to contribute Vessel EBITDA of $13.1 million in the twelve month period following their respective deliveries, and an aggregate cumulative Vessel EBITDA of $38.5 million through their charter expirations.

Vessel EBITDA is calculated as follows: (i) revenue based on 360 days at the fixed net charter rate per day less (ii) operating expenses based on 365 days at $7,400 per day and (iii) general and administrative expenses based on 365 days at $685 per day.

Delivery of two 4,360 TEU containerships

In December 2018, Navios Containers took delivery of two 2010-built 4,360 TEU containerships, the Bahamas and the Bermuda. The containerships were acquired for a total purchase price of $23.6 million. The vessels were financed with the proceeds of a commercial bank loan described below and cash on balance sheet.

Following the above transactions Navios Containers has grown from 21 to 30 vessels since the end of 2017, including one containership to be delivered in Q1 of 2019 and the exercise of the option to acquire one additional 10,000 TEU containership. This represents a fleet capacity growth, on a TEU basis, of 72% during the period.

Financing Developments

Sale and leaseback transaction

On November 9, 2018 Navios Containers completed the sale and leaseback of four additional vessels with Minsheng Financial Leasing Co. Ltd. for approximately $26.7 million, as part of its previously announced sale and leaseback transaction.

In aggregate the Company has completed a $90.2 million sale and leaseback of 14 vessels. The sale and leaseback has an implied interest rate of 6.0%, a term of five years and an age adjusted amortization profile of 21 years. Navios Containers has the obligation to purchase the vessels at the end of the fifth year for a total amount of $45.1 million.

Refinancing and add-on of existing facility

In December 2018, Navios Containers entered into an agreement with a commercial bank for a $50.0 million loan to (i) refinance its existing 2019 maturities and (ii) to partially finance the acquisition of the two 4,360 TEU containerships delivered in December 2018. The new facility matures in 2022 and bears interest at Libor + 350 bps.

Following the completion of the sale and leaseback transactions and the new $50.0 million loan described above, the Company has no debt maturities until 2022.

Fleet Employment

Navios Containers owns a fleet of 30 vessels, including one containership of which we expect to take delivery in the first quarter of 2019 and assuming the exercise of the Company’s option to acquire one 10,000 TEU containership, totaling 152,821 TEU. The current average age of the fleet is 10.5 years (See Exhibit II). As of January 29, 2019, Navios Containers has chartered-out 45.4% and 14.5% of available days for 2019 and for 2020, respectively, which are expected to generate $91.4 million and $42.4 million in revenue, respectively. The average expected daily charter-out rate for the fleet is $18,654 and $26,609 for 2019 and for 2020, respectively, and the total expected available days for 2019 and for 2020, are 10,794 days and 10,980 days, respectively.

Earnings Highlights

For the following results and the selected financial data presented herein, Navios Containers has compiled consolidated statements of operations for the three month periods ended December 31, 2018 and 2017. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings per common unit (basic and diluted) are non-U.S. GAAP financial measures 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, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings Per Common Unit (basic and diluted) of Navios Containers and a reconciliation of such measures 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.

Fourth Quarter 2018 and 2017 Results:

The information for the fourth quarter 2018 and 2017 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

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Revenue for the three month period ended December 31, 2018 was $34.4 million, as compared to $21.3 million for the same period during 2017. The increase of $13.1 million was due to the increase in the number of vessels operating during the three month period ended December 31, 2018 and the resulting increase in the number of available days from 1,434 days for the three month period ended December 31, 2017, to 2,281 days for the three month period ended December 31, 2018.

Net Loss for the three months ended December 31, 2018 was $0.2 million compared to $1.7 million net income for the same period in 2017. Net Loss in the three months ended December 31, 2018 was impacted by expenses relating to the Company’s listing on a U.S. exchange. Excluding these expenses, Adjusted Net Income of Navios Containers for the three months ended December 31, 2018 was $2.4 million, as compared to $1.7 million for the same period in 2017. The $0.7 million increase in Adjusted Net income was mainly due to a $5.4 million increase in Adjusted EBITDA and was partially mitigated by a: (i) $3.0 million increase in interest expense and finance cost, net related to the financing of new vessels; (ii) $1.4 million increase in depreciation and amortization; and (iii) $0.3 million increase in amortization of deferred drydock and special survey costs, in each case, relating to the increase in the size of the fleet.

Adjusted EBITDA for the three months ended December 31, 2018 increased by $5.4 million to $15.3 million as compared to $9.9 million for the same period in 2017. The increase in Adjusted EBITDA was primarily due to a $13.1 million increase in revenue described above reflecting the growth in the number of vessels operating in the fleet during the period and was partially offset by a: (i) $6.0 million increase in management fees mainly due to the increase of the available days from 1,434 days for the three month period ended December 31, 2017, to 2,281 days for the three month period ended December 31, 2018; (ii) $0.9 million increase in general and administrative expenses also mainly related to the growth in our fleet; (iii) $0.7 million increase in time charter and voyage expenses; and (iv) $0.1 million increase in other expenses.

Year Ended December 31, 2018 and period from April 28, 2017 (date of inception) to December 31, 2017 Results:

The information for the year ended December 31, 2018 and for the period from April 28, 2017 (date of inception) to December 31, 2017 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

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Revenue for the year ended December 31, 2018 was $133.9 million, as compared to $39.2 million for the period from April 28, 2017 (date of inception) to December 31, 2017. The increase of $94.7 million was mainly due to the increase in the number of vessels operating during the year ended December 31, 2018 and the resulting increase in the number of available days from 2,411 for the period from April 28, 2017 (date of inception) to December 31, 2017, to 8,442 for the year ended December 31, 2018.

Net income for the year ended December 31, 2018 was $12.7 million compared to $2.6 million for the period from April 28, 2017 (date of inception) to December 31, 2017. Net Income was affected by items described in the table above. Excluding these items, Adjusted Net Income of Navios Containers for the year ended December 31, 2018 was $17.7 million, as compared to $3.1 million for the period from April 28, 2017 (date of inception) to December 31, 2017. The $14.6 million increase in Adjusted Net income was mainly due to a $50.1 million increase in Adjusted EBITDA that was partially offset by a: (i) $25.0 million increase in depreciation and amortization; (ii) $9.4 million increase in interest expense and finance cost, net related to the financing of new vessels; and (iii) $1.1 million increase in amortization of deferred drydock and special survey costs, in each case, relating to the increase in the size of the fleet.

Adjusted EBITDA for the year ended December 31, 2018 increased by $50.1 million to $69.3 million as compared to $19.2 million for the period from April 28, 2017 (date of inception) to December 31, 2017. The increase in Adjusted EBITDA was primarily due to (i) a $94.7 million increase in revenue reflecting the growth in the number of vessels operating in the fleet during the period; and (ii) a $0.7 million increase in other income mainly attributable to the settlement of outstanding claims. This overall increase of $95.4 million was partially offset by a: (i) $37.3 million increase in management fees mainly due to the increase of the available days from 2,411 for the period from April 28, 2017 (date of inception) to December 31, 2017, to 8,442 for the year ended December 31, 2018; (ii) $5.1 million increase in general and administrative expenses also mainly due to the growth in our fleet; and (iii) $2.9 million increase in time charter and voyage expenses.

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