Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results for the first quarter ended March 31, 2018.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition, stated, “I am pleased with the results of the first quarter. In a difficult market, we took measures to preserve and increase our liquidity, reduce operating costs and position our company for the eventual upturn in rates. Our operating initiatives created about $35.0 million in 2018 liquidity, including the net proceeds from a $44.5 million sale of a VLCC and a refinancing that resulted in the elimination of debt maturities for the next 13 months.”
Angeliki Frangou continued, “In addition, we fixed 77.2% of our available days for the year, of which 32.3% include upside through profit sharing arrangements. We are also returning capital to stockholders, both through a dividend, providing a 11.0% current yield, and share repurchases, which year to date provided an additional 4.0% return.”
HIGHLIGHTS — RECENT DEVELOPMENTS
Dividend of $0.02 per share of common stock
On May 4, 2018, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the first quarter of 2018 of $0.02 per share of common stock. The dividend is payable on June 27, 2018 to stockholders of record as of June 21, 2018. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.
Sale and leaseback agreement
On March 31, 2018, Navios Acquisition entered into a $71.5 million sale and leaseback agreement to refinance the outstanding balance on the existing facility on four product tankers. The proceeds were received in April 2018 and have been used to extinguish $69.25 million of indebtedness. The agreement provides for 24 quarterly payments of $1.5 million each plus interest at LIBOR plus 305 bps per annum. Navios Acquisition has an obligation to purchase the vessels at the end of the sixth year for $35.8 million. Navios Acquisition has no further maturities on its credit facilities for the next 13 months.
Commercial and technical management fees fixed until May 2020
Navios Acquisition fixed the fees of its vessels under its existing management agreement with Navios Tankers Management Inc., a wholly-owned subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”), for an additional two-year period until May 28, 2020, following the expiration of the current fixed fee period, at a daily fee of: (a) $6,500 per MR2 product tanker and chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC. The increase represents a weighted average increase of 1.2% in the management fees of the fleet. Drydocking expenses are reimbursed at cost for all vessels.
Sale of a VLCC
On March 29, 2018, the Company sold to Navios Maritime Midstream Partners L.P. (“Navios Midstream”) the Nave Galactic, a 2009-built VLCC vessel of 297,168 dwt for a sale price of $44.5 million. The gain on sale of the vessel amounted to $0.03 million. As a result of this transaction, the Nave Galactic has been substituted by the Nave Equinox and the Nave Pyxis, two MR2 product tankers, as collateral under the 8 1/8% Secured Bond due 2021. On March 23, 2018, Navios Acquisition prepaid $26.8 million, being the respective tranche of the facility for the Nave Equinox and the Nave Pyxis.
Stock repurchase program
As of May 9, 2018, Navios Acquisition has repurchased 6,156,244 shares for approximately $5.0 million, under the $25.0 million stock repurchase program, providing an additional return of 4.0% to our stockholders.
Time charter coverage
Navios Acquisition currently owns 35 vessels, of which seven are VLCCs, 26 are product tankers and two are chemical tankers.
Currently, Navios Acquisition has contracted 77.2% of its available days on a charter-out basis for 2018, which is expected to generate revenues of approximately $111.9 million for 2018. The average contractual net daily charter-out rate for the 62.5% of the available days that are contracted on base rate and/or on base rate with profit sharing is expected to be $14,008 for 2018.
Three month periods ended March 31, 2018 and 2017
Revenue for the three month period ended March 31, 2018 decreased by $18.3 million, or 28.4%, to $46.2 million, as compared to $64.5 million for the same period of 2017. The decrease was mainly attributable to a decrease in the market rates during the first quarter ended March 31, 2018, as compared to the same period in 2017. Available days of the fleet decreased to 3,181 days for the three month period ended March 31, 2018, as compared to 3,207 days for the three month period ended March 31, 2017. The time charter equivalent rate, or TCE Rate, decreased to $14,205 for the three month period ended March 31, 2018, from $19,475 for the three month period ended March 31, 2017.
Net loss for the three month period ended March 31, 2018 amounted to $24.5 million as compared to $5.6 million net income for the same period of 2017. The decrease was mainly due to a: (a) $22.4 million decrease in Adjusted EBITDA; (b) $6.0 million of negative effect on equity/ (loss) in net earnings of affiliated companies, relating to the sale of the Shinyo Kannika by Navios Midstream; (c) $0.7 million increase in direct vessel expenses; (d) $0.4 million decrease in interest income; (e) $0.3 million of non-cash stock-based compensation; (f) $0.3 million write-off of deferred finance costs; and (g) $0.1 million increase in interest expense and finance cost.
Adjusted EBITDA, affected by the items described in the table above, decreased by approximately $22.4 million to $15.0 million for the three month period ended March 31, 2018, as compared to $37.4 million for the same period of 2017. The decrease in Adjusted EBITDA was mainly due to: (a) an $18.3 million decrease in revenue, as described above; (b) a $2.6 million increase in time charter expenses mainly due to the accrued backstop commitment to Navios Midstream; (c) a $1.1 million decrease in equity /(loss) in net earnings of affiliated companies (excluding the $6.0 million of negative effect on equity/ (loss) in net earnings of affiliated companies, relating to the sale of the Shinyo Kannika by Navios Midstream); (d) a $0.2 million increase in other expense, net; and (e) a $0.1 million increase in general and administrative expenses, excluding stock-based compensation.