Navios Containers returns to profit

Navios Containers

Navios Containers, a growth vehicle dedicated to the container sector of the maritime industry, reported its financial results for the fourth quarter and year ended December 31, 2019.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results for the fourth quarter and full year of 2019. For the fourth quarter of 2019, Navios Containers reported $18.2 million of Adjusted EBITDA, $5.9 million of Adjusted Net Income and $0.17 of Adjusted Net Earnings per common unit. For the full year of 2019, Navios Containers reported $59.6 million of Adjusted EBITDA, $10.5 million of Adjusted Net Income and $0.30 of Adjusted Net Earnings per common unit. “

Angeliki Frangou continued, “We believe that Navios Containers is well positioned for 2020. We have visibility on revenue through our chartering activities and on cost through the renewed management agreement. However, we cannot determine the impact of the coronavirus in China, as developing facts make it impossible to assess the potential ramifications.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Fleet Employment
Navios Containers owns a fleet of 29 vessels, totaling 142,821 TEU. The current average age of the fleet is 11.6 years (See Exhibit II). As of January 31, 2020, Navios Containers has chartered-out 45.8% and 10.1% of its available days for 2020 and 2021, respectively (including index-linked charters). Excluding index-linked charters, Navios Containers has chartered-out 40.5% and 8.2% of its available days for 2020 and 2021, respectively, which are expected to generate $73.3 million and $22.7 million in revenue, respectively. The average expected daily contracted charter-out rate for the fleet is $17,066, net and $26,189, net for 2020 and 2021, respectively (excluding index-linked charters), and the total expected available days for 2020 and 2021, are 10,614 days and 10,585 days, respectively.

Earnings Highlights
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 measure to the most comparable measures calculated under U.S. GAAP.

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

Three Month Period
Ended

December 31, 2019
Three Month Period
Ended

December 31, 2018
(in thousands of U.S. dollars, except per unit data) (unaudited) (unaudited)
Revenue $ 38,991 $ 34,416
Net Income/(Loss) $ 2,935 $ (242 )
Adjusted Net Income $ 5,935 (1) $ 2,352 (2)
Net cash provided by operating activities $ 12,667 $ 9,635
EBITDA $ 15,220 $ 12,663
Adjusted EBITDA $ 18,220 (1) $ 15,257 (2)
Net Earnings/(Loss) per common unit (basic and diluted) $ 0.08 $ (0.01 )
Adjusted Net Earnings per common unit (basic and diluted) $ 0.17 (1) $ 0.07 (2)

(1) Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings per common unit (basic and diluted) for the three month period ended December 31, 2019 exclude $3.0 million of expense related to a vessel purchase option not exercised.
(2) Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings per common unit (basic and diluted) for the three month period ended December 31, 2018 exclude $2.6 million of expenses relating to the Company’s listing on a U.S. exchange.

Revenue for the three months ended December 31, 2019 was $39.0 million, as compared to $34.4 million for the same period during 2018. The increase of $4.6 million was mainly due to the increase in the number of vessels operating during the three months ended December 31, 2019 and the resulting increase in the number of available days from 2,281 for the three months ended December 31, 2018, to 2,576 for the three months ended December 31, 2019. TCE per day increased from $14,387 for the three months ended December 31, 2018 to $14,615 for the same period during 2019.

Net Income for the three months ended December 31, 2019 was $2.9 million compared to a $0.2 million net loss for the same period in 2018. Net Income/(loss) was impacted by items described in the table above. Excluding these expenses, Adjusted Net Income of Navios Containers for the three months ended December 31, 2019 was $5.9 million as compared to $2.4 million for the same period in 2018. The $3.5 million increase in Adjusted Net Income was mainly due to a: (i) $2.9 million increase in Adjusted EBITDA; (ii) $1.1 million decrease in depreciation and amortization expenses, relating mainly to the lower amortization of intangible assets; and (iii) $0.1 million decrease in interest expense and finance cost, net.  This overall increase of $4.1 million was partially offset by a $0.6 million increase in amortization of deferred drydock and special survey costs relating to the increase in the size of the fleet.

Adjusted EBITDA for the three months ended December 31, 2019 increased by $2.9 million to $18.2 million as compared to $15.3 million for the same period in 2018. The increase in Adjusted EBITDA was primarily due to a: (i) $4.6 million increase in revenue; (ii) $0.3 million decrease in time charter and voyage expenses; and (iii) $0.2 million decrease in other expenses, net.  This overall increase of $5.1 million was partially offset by a: (i) $1.6 million increase in management fees mainly due to the increase of the available days from 2,281 days for the three months ended December 31, 2018, to 2,576 days for the three months ended December 31, 2019; (ii) $0.3 million increase in general and administrative expenses mainly related to the growth in our fleet; and (iii) $0.3 million increase in other direct vessel expenses.

Year Ended December 31, 2019 and 2018 Results

The information for the year ended December 31, 2019 and 2018 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

Year Ended
December 31, 2019
Year Ended
December 31, 2018
(in thousands of U.S. dollars, except per unit data) (unaudited) (unaudited)
Revenue $ 141,532 $ 133,921
Net Income $ 7,507 $ 12,700
Adjusted Net Income $ 10,507 (1) $ 17,690 (2)
Net cash provided by operating activities $ 36,976 $ 47,509
EBITDA $ 56,639 $ 64,262
Adjusted EBITDA $ 59,639 (1) $ 69,252 (2)
Net Earnings per common unit (basic and diluted) $ 0.22 $ 0.38
Adjusted Net Earnings per common unit (basic and diluted) $ 0.30 (1) $ 0.53 (2)

(1) Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings per common unit (basic and diluted) for the year ended December 31, 2019 exclude $3.0 million of expense related to a vessel purchase option not exercised.
(2) Adjusted EBITDA, Adjusted Net Income and Adjusted Net Earnings per common unit (basic and diluted) for the year ended December 31, 2018 exclude $5.0 million of expenses relating to the Company’s listing on a U.S. exchange.

Revenue for the year ended December 31, 2019 was $141.5 million, as compared to $133.9 million for the same period during 2018. The increase of $7.6 million was mainly due to the increase in the number of vessels operating during the year ended December 31, 2019 and the resulting increase in the number of available days from 8,442 for year ended December 31, 2018, to 10,261 for the year ended December 31, 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 $15,369 for the year ended December 31, 2018 to $13,232 for the same period during 2019, primarily as a result of the expiration of these contracts between the two periods.

Net Income for the year ended December 31, 2019 was $7.5 million compared to $12.7 million for the same period in 2018. Net Income was impacted by items described in the table above. Excluding these expenses, Adjusted Net Income for the year ended December 31, 2019 was $10.5 million as compared to $17.7 million for the same period in 2018. The $7.2 million decrease in Adjusted Net Income was mainly due to a: (i) $9.7 million decrease in Adjusted EBITDA; (ii) $5.1 increase in interest expense and finance cost, net; and (iii) $2.4 million increase in amortization of deferred drydock and special survey costs, relating to the increase in the size of the fleet.  This overall resulting decrease of $17.2 million was partially offset by $10.0 million decrease in depreciation and amortization expenses, relating mainly to the lower amortization of intangible assets.

Adjusted EBITDA for the year ended December 31, 2019 decreased by $9.7 million to $59.6 million as compared to $69.3 million for the same period in 2018. The decrease in Adjusted EBITDA was primarily due to: (i) an $11.8 million increase in management fees mainly due to the increase of the available days from 8,442 days for the year ended December 31, 2018, to 10,261 days for the year ended December 31, 2019; (ii) a $2.8 million increase in general and administrative expenses mainly related to the growth in our fleet; (iii) a $1.6 million increase in time charter and voyage expenses; (iv) a $0.6 million decrease in other income, net; and (v) a $0.5 million increase in other direct vessel expenses. This overall resulting decrease of $17.3 million was partially offset by a $7.6 million increase in revenue described above reflecting the growth in the number of vessels operating in the fleet during the period.

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 months ended December 31, 2019 and 2018 and for the year ended December 31, 2019 and 2018.

Three Month Three Month
Period Ended Period Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2019 2018 2019 2018
(unaudited) (unaudited) (unaudited) (unaudited)
Available Days (1) 2,576 2,281 10,261 8,442
Operating Days (2) 2,561 2,267 10,219 8,342
Fleet Utilization (3) 99.4 % 99.4 % 99.6 % 98.8 %
Vessels operating at period end 29 28 29 28
TCE (4) $ 14,615 $ 14,387 $ 13,232 $ 15,369
(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.

 

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