Navios Maritime Midstream posts 3Q profit

Navios_Frangou

Navios Maritime Midstream Partners L.P. (“Navios Midstream”) (NAP), an owner and operator of tanker vessels, reported its financial results today for the third quarter and the nine month period ended September 30, 2016.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Midstream stated: “We are pleased with our third quarter results, for which we recorded $15.7 million of EBITDA and $5.5 million of net income. We recently announced a distribution of $0.4225 per unit, representing an annual distribution of $1.69 and a current yield of approximately 15% per unit. Our unit coverage ratio was 1.06x for the quarter.”

Angeliki Frangou continued, “Navios Midstream extended the fixed fee under the management agreement until December 2018 with no increase. Operating expenses for commercial and technical management of the vessels thus remain at $9,500 per day, about 8% below the industry average. Navios Midstream also extended, for a two-year period, purchase options for three of the five vessels, all of which were scheduled to expire in November of 2016. The commercial terms of the options will remain the same and Navios Maritime Acquisition Corporation will not be providing any charter rate backstop. We anticipate that these options will provide a continued avenue for fleet and distribution growth.”

RECENT DEVELOPMENTS

Extension of fixed fee period under the Management Agreement

In October 2016, Navios Midstream amended its existing management agreement (the “Management Agreement”) with Navios Tankers Management Inc., a wholly-owned subsidiary of Navios Maritime Holdings Inc., to extend the fixed fee period for commercial and technical management services of its fleet, until December 31, 2018 at the current rate of $9,500 per day per VLCC, following the expiration of the current fixed fee period. Dry docking expenses are reimbursed at cost for all vessels.

Purchase option extended for three VLCCs

Navios Midstream holds options to acquire up to five VLCCs from Navios Maritime Acquisition Corporation (“Navios Acquisition”) expiring on November 18, 2016. In October 2016, Navios Acquisition extended the options of the Nave Buena Suerte, the Nave Neutrino and the Nave Electron for an additional two-year period expiring on November 18, 2018. The purchase price will be equal to the fair market value of each of the three vessels at the time of the options’ exercise. The extended purchase options do not include any backstop commitments from Navios Acquisition.

Cash Distribution

The Board of Directors of Navios Midstream declared a cash distribution for the third quarter of 2016 of $0.4225 per unit. The cash distribution is payable on November 10, 2016 to unitholders of record as of November 8, 2016.

Long – Term Cash Flow and Profit Sharing

Navios Midstream has entered into long-term charter-out agreements for its vessels, with a remaining average term of 4.6 years, which are expected to provide a stable base of revenue and distributable cash flow. Navios Midstream has currently contracted out 100% of its available days for each of 2016 and 2017 and 99.4% for 2018, including the backstop commitment provided by Navios Acquisition, expecting to generate revenues of approximately $94.5 million, $86.6 million and $86.2 million for 2016, 2017 and 2018, respectively. The average expected daily charter-out rate for the fleet is $43,036, $39,559 and $39,587 for 2016, 2017 and 2018, respectively.

During the three month period and the nine month period ended September 30, 2016, Navios Midstream recognized $0.6 million and $4.9 million, respectively, under its profit sharing arrangements.

Continuous Offering Program

On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement (the “Sales Agreement”) with S. Goldman Capital LLC, as sales agent (the “Agent”), pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25.0 million. As of September 30, 2016, Navios Midstream issued 277,103 common units and received net proceeds of $3.4 million after deducting fees and expenses of $0.2 million. In connection with the issuance of the common units, Navios Midstream issued 5,655 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were $0.1 million.

Three month periods ended September 30, 2016 and 2015

Revenue for the three month period ended September 30, 2016 decreased by $0.3 million to $22.2 million, as compared to $22.5 million for the same period in 2015. Time Charter Equivalent (“TCE”) was $40,835 for the three month period ended September 30, 2016 and $45,432 for the three month period ended September 30, 2015. The decrease in TCE was mainly due to the decrease by $1.5 million of profit sharing recognized in relation to certain charters for the three month period ended September 30, 2016, as compared to the same period of 2015.

EBITDA decreased by approximately $0.5 million to $15.7 million for the three month period ended September 30, 2016, as compared to $16.2 million for the same period in 2015. The decrease in EBITDA was due to a: (a) $0.3 million decrease in revenue; (b) $0.2 million increase in time charter expenses; and (c) $0.1 million increase in general and administrative expenses.

The reserve for estimated maintenance and replacement for capital expenditures for each of the three month periods ended September 30, 2016 and 2015 was $3.6 million (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Navios Midstream generated an Operating Surplus for the three month period ended September 30, 2016 of $9.3 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 Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Net income for the three month period ended September 30, 2016 was $5.5 million compared to $6.2 million for the three month period ended September 30, 2015. The decrease in net income of approximately $0.8 million was due to a: (a) $0.5 million decrease in EBITDA; and (b) $0.4 million increase in direct vessel expenses; partially mitigated by a $0.1 million increase in interest income.

Earnings per common unit for the three month period ended September 30, 2016 were $0.26.

Nine month periods ended September 30, 2016 and 2015

Revenue for the nine month period ended September 30, 2016 increased by $11.5 million to $69.1 million, as compared to $57.5 million for the same period in 2015. The increase was due to the acquisition of the Nave Celeste and the C. Dream in June 2015 and an increase of $0.4 million in profit sharing recognized in relation to certain charters for the nine month period ended September 30, 2016, as compared to the same period of 2015. Time Charter Equivalent (“TCE”) was $43,295 for the nine month period ended September 30, 2016 and $45,917 for the nine month period ended September 30, 2015. The decrease in TCE was due to the lower average charter rate of the two VLCCs acquired in June 2015, compared to the existing fleet.

EBITDA increased by approximately $7.0 million to $49.8 million for the nine month period ended September 30, 2016, as compared to $42.8 million for the same period in 2015. The increase in EBITDA was mainly due to an $11.5 million increase in revenue. The above increase was partially mitigated by a: (a) $3.2 million increase in management fees; (b) $0.6 million increase in general and administrative expenses; (c) $0.5 million increase in time charter expenses; and (d) $0.1 million increase in other (expense)/ income, net.

The reserve for estimated maintenance and replacement capital expenditures for the nine month periods ended September 30, 2016 and 2015 was $10.7 million and $8.1 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Navios Midstream generated an Operating Surplus for the nine month period ended September 30, 2016 of $30.6 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 Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Net income for the nine month period ended September 30, 2016 was $18.8 million compared to $17.9 million for the nine month period ended September 30, 2015. The increase of approximately $0.9 million in net income was due to a: (a) $7.0 million increase in EBITDA; and (b) $0.2 million increase in interest income; partially mitigated by a: (i) $2.8 million increase in depreciation and amortization; (ii) $2.0 million increase in interest expenses and finance cost; and (iii) $1.4 million increase in direct vessel expenses.

Earnings per common unit for the nine month period ended September 30, 2016 were $0.91.

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