There is app. 25% mismatch beween what they generate in distributable cash flow and distributed dividend (the deficit is return of capital)
There is no sufficient cash left for Q3 distribution so the dividend cut is now inevitable.
They planed to issue equity to fund 3Q distribution and now they can not with these prices therefore the market is expecting the cut.
You probably missed in cash flow the dividend that GOV is receving from SIR investment. It is over $10m per quarter (last Q it was $11.6m while SIR was then paying lower dividend than current $2 annual run rate).
GOV is making app. $33-34m of cash basis operating income including G&A per Q
additionaly gets app. $50m from SIR dividend (per annum based on $2 per share SIR divy)
In total this gives over $180m in annual cash income GOV+SIR divy
less app. $36m of interest on debt
so the annualised disposable cash for distribution is app. $144m while the total dividend from GOV is $120m
I think this gives nice coverage
They had $27m in unresticted cash as of 30 June.
The dividend payout is $38m on 13th August. (for Q2)
Till 13th August they should have app. $38m in unrestricted cash (from July net operating cash flow) to fully secure this August distribution buth then the cash balance is ZERO.
Q3 operating cash flow as you know will be low and part of it will be use to fund August distribution so at the end of Septemeber NMM will probably finish with $10-15m of unrestricted cash and will not be able to fully met $38m Q3 distribution without dilution.
So the share issuance will be very very soon.
Another magic formula that is saying 0.9 or like the lady says 104%.
But the real fact from the REPORTED figures that in Q1 coverage was 73%
in Q2 it was 77%
It is REPORTED not some magic formula
Now we are talking about 58%-65-75% coverage for Q3 depending on assumption
They burnt $10.5m of cash with Q1 distribution
they burnt $9m of cash with Q2 distribution
They will probably burn app. $10-15m with Q3 distribution
Stop believing in that lady promises.
The cash balance is the limit.
Game over is coming very soon.
How did you arrive to 65% in Q3
Q2 operating cash was $29.3m
impact of Samsung -$5m
impact of fulvia -$2.2m
Q3 estimated at $22m vs distribution of $38.1m so the coverage is 58%
The deficit of $16m is not to be covered by cash balance by then.
This lady claims 104% coverage every quarter stating that this is magic proforma calculation that is not even presented.
The deadline for the this lady is $22m in unresticted cash - half of that will be burnt with Q2 distribution. Than Q3 distribution will come that together with operating deficit will burn this cash balance to zero.
Then the distribution NOT covered game is over.
One more issue you probably missed is negative impact of Fulvia contract expiry since Aug 2015
New contract @ $13.400 per day instead of $50.588..
Estimated hit of -$2.2m in Q3
Yes you are right, total cash balance of 49m includes 22m restricted cash which is not easy to consume. My statement was a bit simplification because I am not assuming they will wait untli last cent to issue share but I do expect dilution before year end.
Do not get fooled by some "analyst" that is trying to convince there is some other EBITDA.
No there is not.
Their EBITDA is like any other not including interest on debt
Go to page 12 in their financial report.
The operatig surplus is $28.3 and this is the only correct figure for evaluating dividend coverage.
It is not so bad. They just need to cut distribution by 20%. They still have $49m cash left so burning $9-10m per quarter it is sufficient for nex 4-5 quarters. Later, they will do the offering.
I do not understand you. You can read from the definition that EBITDA is net income PLUS interest and finance costs PLUS depreciation & amor. so this is normal EBITDA like in any other company.
It does not make sense to discuss theoretically.
Go to their financial report page 12 so you see there clear caluclation of EBITDA and operating surplus. No rocket science just clear view what is included in those profit levels. This is exectly what I explained to you.
Just check it page 12.
I will explain it to you one more time becasue you do not have financial clue.
EBITDA is BEFORE interest on the debt.
NMM has significant debt bearing interest ($6m last quarter), so their operating income must cover interest and later on the distribution is paid.
From EBITDA they also need to cover maintenance and replacement capital expenditures which was app. $3.5m last quarter.
So EBITDA is not correct profit level to evaluate distribution coverage!
$29.3 is the correct figure as it really show how much money is left for distribution
The drydock imapact was $2.8m in rental income and we are talking in $9m of financial gap between distribution and operating surplus. Come on they are burning app $9-10m of cash per quarter. $49m cash left to next dilution.
No EBITDA is not correct profit level to evaluate distribution coverage.
There is also debt that bears interest (that you have to pay from EBITDA) and you also need to consider maintenance and replacement capital expenditures.
$29.3 is the correct figure.
They never show caluclation of their 104 coverage and declined to do so when I requested. They are lying about full coverage and still pay out $9-10m per quarter than they make.
Cash remaining is $49m still four quarters to consume that balance and then they will issue equity (dilution) to fund future distibutions.
Fully agree therefore I was surprised why they did not take this write down in Q1.
Still healthy coverage of dividend with cash FFO.
Sorry to dissapoint you but extra container is eaten by impact of Fulvia contract expiry since Aug 2015 (new contract at $13.400 per day instead of $50.588).
They finally took a write down on SIR shares
""The net loss for the quarter ended June 30, 2015 included a non-cash loss on impairment of GOV’s investment in SIR of $203.3 million, or $2.88 per diluted share.
Operating surplus in Q2 at $29.3m while total distribution at $38,1m
Distribution coverage 77%
Still paying $9m more than they get.
No chance to get to 104% coverage which they presented in Q1 presentation.