Navios Maritime Midstream Partners Reports Net Income of $4.3 Mln for 2nd Quarter

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Navios Maritime Midstream Partners L.P., an owner and operator of tanker vessels, reported its financial results for the second quarter and the six month period ended June 30, 2018.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Midstream, stated, “We are pleased to report results for the second quarter of 2018. In the second quarter of 2018, we reported $14.7 million of EBITDA and $4.3 million of net income. We also announced a distribution of $0.125 per unit, representing an annualized yield of about 14%.”

RECENT DEVELOPMENTS

Merger Proposal from Navios Acquisition

On July 2, 2018, Navios Midstream announced that its board of directors had received a proposal from Navios Maritime Acquisition Corporation (“Navios Acquisition”) (NYSE:NNA) pursuant to which Navios Acquisition would acquire the publicly held common units of Navios Midstream not already owned by Navios Acquisition in a stock for units exchange.

Subject to negotiation and execution of a definitive agreement, Navios Acquisition is proposing consideration of 6.292 Navios Acquisition shares for each outstanding publicly held common unit of Navios Midstream as part of a transaction that would be structured as a merger of Navios Midstream with and into Navios Acquisition.

The proposed transaction is subject to the negotiation and execution of a definitive agreement, approval of the board of directors of Navios Acquisition and the necessary approvals of the conflicts committee of Navios Midstream under Navios Midstream’s limited partnership agreement. The consummation of the proposed transaction would be subject to customary closing conditions. There can be no assurance that any such approvals will be forthcoming, that a definitive agreement will be executed, or that any transaction will be consummated.

Cash Distribution

The Board of Directors of Navios Midstream declared a cash distribution for the second quarter of 2018 of $0.125 per unit. The cash distribution is payable on August 14, 2018 to unitholders of record as of August 6, 2018.

Navios Midstream’s ability to make distributions to its unitholders depends on the performance of its subsidiaries and their ability to distribute funds to it. The ability of Navios Midstream’s subsidiaries to make distributions to it may be restricted by, among other things, the provisions of existing and future indebtedness, market conditions, applicable partnership and limited liability company laws and other laws and regulations.

Time charter coverage

Navios Midstream has entered into charter-out agreements for its vessels, with a remaining average term of 2.8 years, which are expected to provide a stable base of revenue and distributable cash flow. Navios Midstream has currently contracted out 100.0% of its available days for 2018 and 40.8% for 2019 expecting to generate revenues, including the backstop commitment provided by Navios Acquisition, of approximately $83.7 million and $40.8 million for 2018 and 2019, respectively. The average expected daily charter-out rate for the fleet is $39,060 and $45,613 for 2018 and 2019, respectively.

Three month periods ended June 30, 2018 and 2017

Revenue for the three month period ended June 30, 2018 increased by $2.3 million to $20.8 million, as compared to $18.5 million for the same period in 2017. The increase was mainly attributable to the increase in available days from 463 in the three month period ended June 30, 2017 to 517 days in the three month period ended June 30, 2018, due to certain unscheduled off-hires among which the prolonged drydock of one of our vessels incurred in the three month period ended June 30, 2017. Time Charter Equivalent (“TCE”) was $39,578 for the three month period ended June 30, 2018 and $39,342 for the three month period ended June 30, 2017.

EBITDA increased by approximately $2.3 million to $14.7 million for the three month period ended June 30, 2018, as compared to $12.4 million for the same period in 2017. The increase in EBITDA was mainly due to the $2.3 million increase in revenue.

Net income increased by approximately $2.3 million to $4.3 million for the three month period ended June 30, 2018, as compared to $2.0 million for the same period in 2017. The increase in net income of approximately $2.3 million was mainly attributable to a: (a) $2.3 million increase in EBITDA; (b) $0.5 million decrease in depreciation and amortization due to the sale of the Shinyo Kannika mitigated by the acquisition of the Nave Galactic in the first quarter of 2018; and (c) $0.1 million increase in interest income; partially mitigated by a: (i) $0.6 million increase in interest expenses and finance cost; and (ii) $0.1 million increase in direct vessel expenses.

The reserve for estimated maintenance and replacement capital expenditures for the three month periods ended June 30, 2018 and 2017 was $2.6 million and $2.5 million, respectively (please see “Disclosure of Non-GAAP Financial Measures” in Exhibit 3).

Navios Midstream generated an Operating Surplus for the three month period ended June 30, 2018 of $8.9 million. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (please see “Disclosure of Non-GAAP Financial Measures” in Exhibit 3).

Earnings per common unit for the three month period ended June 30, 2018 were $0.21.

Six month periods ended June 30, 2018 and 2017

Revenue for the six month period ended June 30, 2018 increased by $1.0 million to $40.6 million, as compared to $39.6 million for the same period in 2017. The increase was mainly attributable to the increase in available days from 1,003 in the six month period ended June 30, 2017 to 1,039 days in the six month period ended June 30, 2018, due to certain unscheduled off-hires among which the prolonged drydock of one of our vessels incurred in the three month period ended June 30, 2017. TCE was $38,535 for the six month period ended June 30, 2018 and $38,914 for the six month period ended June 30, 2017.

EBITDA was affected by a $32.4 million book loss on the sale of the Shinyo Kannika. Excluding this item, Adjusted EBITDA was $28.4 million compared to $27.1 million for the same period in 2017. The increase in Adjusted EBITDA by $1.3 million was due to a: (a) $1.0 million increase in revenue; (b) $0.5 million increase in other income/(expense), net; and (c) $0.1 million decrease in management fees; partially mitigated by a $0.3 million increase in general and administrative expenses.

Net loss for the six month period ended June 30, 2018 amounted to $25.3 million as a result of the above mentioned $32.4 million loss on sale of vessel. Excluding this item Adjusted net income was $7.2 million compared to $6.5 million for the same period in 2017. The increase of $0.7 million was attributable to a: (a) $1.3 million increase in Adjusted EBITDA; (b) $0.7 million decrease in depreciation and amortization due to the sale of the Shinyo Kannika mitigated by the acquisition of the Nave Galactic in the first quarter of 2018; and (c) $0.1 million increase in interest income; partially mitigated by a: (i) $0.9 million increase in interest expenses and finance cost; and (ii) $0.5 million increase in direct vessel expenses.

The reserve for estimated maintenance and replacement capital expenditures for the six month period ended June 30, 2018 and 2017 was $5.4 million and $4.9 million, respectively (please see “Disclosure of Non-GAAP Financial Measures—4. Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities” in Exhibit 3).

Navios Midstream generated an Operating Surplus for the six month period ended June 30, 2018 of $16.7 million.

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