Navios Maritime Midstream Partners L.P. Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2014
Dividend of $0.1973 per Unit for the Period From November 18, 2014 to December 31, 2014
MONACO--(Marketwired - Jan 27, 2015) - Navios Maritime Midstream Partners L.P. ("Navios Midstream") (NYSE: NAP), an owner and operator of tanker vessels, reported its financial results today for the period from November 18, 2014, when it formally launched its shipping operations, through December 31, 2014. The reporting period consists of 44 of 92 days in the calendar quarter. On November 18, 2014, Navios Midstream completed its initial public offering ("IPO") and raised net proceeds of approximately $110.1 million through the sale of 8.1 million units to the public.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Midstream stated, "We are excited to report Navios Midstream's initial results for the quarter ending December 31, 2014. On a pro forma basis, assuming the fleet had been operational in Navios Midstream with its existing balance sheet for the entire quarter, Navios Midstream earned $16.0 million of revenue and $11.9 million of EBITDA. Navios Midstream declared a cash distribution of $0.1973 per unit, which translates into $0.4125 per unit on a quarterly basis, providing our unit holders with a yield of almost 11.5%. This yield is well in excess of the Alerian index yield, and we feel that it does not properly account for the growth characteristics of Navios Midstream."
Angeliki Frangou continued, "We believe the dramatic decline in the price of oil is unequivocally positive for oil consumption and ultimately oil transportation. Current spot rates for VLCCs are three times greater than the average VLCC spot rate for 2014 -- it appears that people are restocking in this low price environment. We do not believe that this behavior will be short-lasting given the stimulative impact of the price decline in oil. With oil at about $50 per barrel, global consumers save about $4.5 billion a day compared to their oil expenditures in 2014. This amounts to annual savings of more than $1.6 trillion dollars, which should act to stimulate the global economy. This boost to the economy is in addition to the structural change in the demand for oil transportation, as ton miles have increased because oil consumption has effectively moved eastward while oil supply has effectively moved westward."
RECENT DEVELOPMENTS
Cash Distribution
The Board of Directors of Navios Midstream declared a cash distribution for the 44-day period from November 18, 2014 to December 31, 2014, of $0.1973 per unit ($0.4125 per unit on a quarterly basis). The cash distribution is payable on February 12, 2015 to unitholders of record on February 9, 2015.
Credit Facility
In November 2014, Navios Midstream entered into a new credit facility of $126.0 million to finance a portion of the purchase price payable in connection with the acquisition of its four VLCCs. The facility bears interest at LIBOR plus 300 basis points per annum and has an amortization profile of 12 years.
Fleet Expansion-Options
Navios Midstream operates a fleet of four VLCCs and has options, exercisable for a period of two years following the closing of the IPO on November 18, 2014, to acquire up to seven additional VLCCs at fair market value from Navios Maritime Acquisition Corporation ("Navios Acquisition").
Navios Acquisition has provided a backstop commitment to Navios Midstream for three of the seven option vessels, for a period ranging from 2.0 to 4.0 years at the net time charter-out rate per day (net of commissions) of $35,000, if the market charter rate during the backstop period is lower than the agreed upon floor rate.
Long-Term Cash Flow
Navios Midstream has entered into long-term time charter-out agreements for its vessels with a remaining average term of 7.4 years, providing a stable base of revenue and distributable cash flow. Navios Acquisition has provided a backstop commitment to Navios Midstream for the Shinyo Ocean and the Shinyo Kannika for a period of 2.0 years following the scheduled redelivery of each vessel, at their currently contracted rates. Navios Midstream has currently contracted out 100% of its available days for each of the years 2015 and 2016, expecting to generate revenues of approximately $63.0 million and $63.2 million, respectively. The average expected daily charter-out rate for the fleet is $43,183, for each of the years 2015 and 2016.
FINANCIAL HIGHLIGHTS
For the following results and the selected financial data presented herein, Navios Midstream has compiled a consolidated and combined statement of income for the three month period ended December 31, 2014 and a consolidated statement of income for the 44-day period post IPO, from November 18, 2014 to December 31, 2014. The historical quarterly 2014 and 44-day information was derived from the unaudited consolidated and combined financial statements for the respective periods. EBITDA and Operating Surplus are non-GAAP financial measures and should not be used in isolation or substitution for Navios Midstream's results.
Navios Midstream is also presenting a pro forma statement of income for the three month period ended December 31, 2014, which assumes that the IPO and related transactions occurred on October 1, 2014. Navios Midstream believes that pro forma statement of income is more representative of the quarterly results of Navios Midstream, given that it assumes a reduction in the quarterly interest expense of $3.0 million as a result of the new credit facility that the company entered into in connection with its IPO. Prior to the IPO, the four VLCCs were financed through the 8.125% Senior Notes due 2021 that were issued by Navios Acquisition ("2021 Notes") and these 2021 Notes were not assumed by Navios Midstream.
| Historical | Historical | Pro Forma | |||||||||
Revenues | $ | 7,643 | $ | 16,008 | $ | 16,008 | ||||||
Time charter expenses | (87 | ) | (183 | ) | (183 | ) | ||||||
Direct vessel expenses | (138 | ) | (289 | ) | (289 | ) | ||||||
Management fees | (1,672 | ) | (3,496 | ) | (3,496 | ) | ||||||
General and administrative expenses | (264 | ) | (540 | ) | (540 | ) | ||||||
Depreciation and amortization | (2,285 | ) | (4,877 | ) | (4,877 | ) | ||||||
Interest expense and finance cost, net | (646 | ) | (4,130 | ) | (1,169 | ) | ||||||
Other income | - | 119 | 119 | |||||||||
Other expense | - | (5 | ) | (5 | ) | |||||||
Net Income | $ | 2,551 | $ | 2,607 | $ | 5,568 | ||||||
EBITDA | $ | 5,620 | $ | 11,903 | $ | 11,903 | ||||||
Earnings per Common unit (basic and diluted) | $ | 0.13 | $ | 0.13 | $ | 0.29 | ||||||
Operating Surplus | $ | 4,593 | $ | N/A(1) | $ | 8,714 | ||||||
Maintenance and Replacement Capital expenditure reserve | $ | 1,027 | $ | N/A(1) | $ | 2,148 | ||||||
(1) Respective information is not applicable for periods prior to the IPO given the change in the business. |
Period from November 18, 2014 to December 31, 2014 and Pro Forma and Historical results for the three month period ended December 31, 2014
For the 44-day period from November 18, 2014 to December 31, 2014 (the "44-day period"), Navios Midstream's time charter revenue amounted to $7.6 million, generating a time charter equivalent ("TCE") of $42,931. Other expenses including management fees and general and administrative expenses amounted to $1.9 million.
On a pro forma and historical basis, Navios Midstream's time charter revenue amounted to $16.0 million for the three month period ended December 31, 2014. Other expenses including management fees and general and administrative expenses amounted to $4.0 million, on both pro forma and historical basis for the three month period ended December 31, 2014.
EBITDA for the 44-day period was $5.6 million, whereas on a pro forma and historical basis for the three month period ended December 31, 2014, Navios Midstream generated EBITDA of $11.9 million.
The reserve for estimated maintenance and replacement capital expenditures for the 44-day period was $1.0 million ($2.1 million on a pro forma basis assuming full quarter operations). Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Midstream's capital assets.
Navios Midstream generated an Operating Surplus for the 44-day period of $4.6 million ($8.7 million on a pro forma basis for the three month period ended December 31, 2014). 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).
Depreciation and amortization expense for the 44-day period (including amortization of drydocking and special survey costs presented under direct vessel expenses) was $2.4 million and interest expense and finance cost related to the new facility agreement of $126.0 million was $0.6 million. Depreciation and amortization expense for the three month period ended December 31, 2014, was 5.2 million on both pro forma and historical basis. Interest expense and finance cost for three month period ended December 31, 2014, was $1.2 million and $4.1 million on a pro forma and historical basis, respectively. Prior to the IPO, the four VLCCs were financed through the 2021 Notes that were issued by Navios Acquisition and these 2021 Notes were not assumed by Navios Midstream.
Net income for the 44-day period was $2.6 million. Net income for the three month period ended December 31, 2014 was $5.6 million and $2.6 million on a pro forma and historical basis, respectively.
Fleet Employment Profile
The following table reflects certain key indicators of Navios Midstream's core fleet performance for the period from November 18, 2014 to December 31, 2014.
Period from November 18, 2014 to December 31, 2014 | |||
Available Days(1) | 176 | ||
Operating Days(2) | 176 | ||
Fleet Utilization(3) | 100 | % | |
Time Charter Equivalent (per day)(4) | $ | 42,931 | |
Vessels operating at period end | 4 | ||
(1) | Available days for the fleet represent total calendar days the vessels were in Navios Midstream's possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues. | |
(2) | Operating days is 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 Midstream's vessels were available for revenue generating available days, 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 efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, drydockings or special surveys. | |
(4) | Time Charter Equivalent ("TCE") rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet. | |
Conference Call details:
Navios Midstream's management will host a conference call today, Tuesday, January 27, 2015 to discuss the results for the fourth quarter ended December 31, 2014.
Conference Call details:
Call Date/Time: Tuesday, January 27, 2015 at 08:30 am ET
Call Title: Navios Midstream Q4 2014 Financial Results Conference Call
US Dial In: +1.866.703.4207
International Dial In: +1.636.692.6440
Conference ID: 6947 0658
The conference call replay will be available two hours after the live call and remain available for one week at the following numbers:
US Replay Dial In: +1.800.585.8367
International Replay Dial In: +1.404.537.3406
Conference ID: 6947 0658
Slides and audio webcast:
There will also be a live webcast of the conference call, through the Navios Midstream's website (www.navios-midstream.com) under "Investors". Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
A supplemental slide presentation will be available on the Navios Midstream's website under the "Investors" section by 8:00 am ET on the day of the call.
About Navios Maritime Midstream Partners L.P.
Navios Maritime Midstream Partners L.P. is a publicly traded master limited partnership which owns and operates crude oil tankers under long-term employment contracts. For more information, please visit our website at www.navios-midstream.com.
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and Navios Midstream's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "may", "expects", "intends", "plans", "believes", "anticipates", "hopes", "estimates", and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and time charters. Although the Navios Midstream believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Midstream. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, competitive factors in the market in which Navios Midstream operates; risks associated with operations outside the United States; and other factors listed from time to time in the Navios Midstream's filings with the Securities and Exchange Commission. Navios Midstream expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Midstream's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
EXHIBIT 1 | ||||||
NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | ||||||
CONSOLIDATED AND COMBINED BALANCE SHEETS | ||||||
(Expressed in thousands of U.S. Dollars) | ||||||
December 31, | December 31, | |||||
(unaudited) | (unaudited) | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 30,877 | $ | 9,152 | ||
Accounts receivable, net | 653 | 817 | ||||
Prepaid expenses and other current assets | 212 | 219 | ||||
Due from related parties | - | 35,756 | ||||
Total current assets | 31,742 | 45,944 | ||||
Vessels, net | 320,229 | 336,452 | ||||
Deferred finance costs, net | 1,913 | 8,057 | ||||
Intangible assets | 31,736 | 35,022 | ||||
Deferred dry dock and special survey costs, net | 1,955 | 3,238 | ||||
Total non-current assets | 355,833 | 382,769 | ||||
Total assets | $ | 387,575 | $ | 428,713 | ||
LIABILITIES AND PARTNERS' CAPITAL | ||||||
Current liabilities | ||||||
Accounts payable | $ | 1,243 | $ | 371 | ||
Accrued expenses | 4,174 | 186 | ||||
Due to related parties | 736 | 472 | ||||
Deferred revenue | 1,938 | 1,938 | ||||
Current portion of long-term debt | 10,504 | - | ||||
Total current liabilities | 18,595 | 2,967 | ||||
Long-term debt | 115,496 | 341,034 | ||||
Total non-current liabilities | 115,496 | 341,034 | ||||
Total liabilities | $ | 134,091 | $ | 344,001 | ||
Commitments and contingencies | - | - | ||||
Owner's net investment | - | 84,712 | ||||
Partners' capital | 253,484 | - | ||||
Total liabilities, Partners' capital and owner's net investment | $ | 387,575 | $ | 428,713 | ||
See notes to consolidated and combined financial statements. |
NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | ||||||||||||||||
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Expressed in thousands of U.S. Dollars, except per unit amounts) | ||||||||||||||||
Three Month | Three Month | Year ended | Year ended | |||||||||||||
Revenues | $ | 16,008 | $ | 16,049 | $ | 63,534 | $ | 63,659 | ||||||||
Time charter expenses | (183 | ) | (211 | ) | (762 | ) | (900 | ) | ||||||||
Direct vessel expenses | (289 | ) | (479 | ) | (1,283 | ) | (1,919 | ) | ||||||||
Management fees | (3,496 | ) | (3,680 | ) | (14,166 | ) | (14,600 | ) | ||||||||
General and administrative expenses | (540 | ) | (269 | ) | (1,296 | ) | (866 | ) | ||||||||
Depreciation and amortization | (4,877 | ) | (4,876 | ) | (19,509 | ) | (19,508 | ) | ||||||||
Interest expense and finance cost, net | (4,130 | ) | (7,518 | ) | (25,473 | ) | (31,249 | ) | ||||||||
Loss on bond extinguishment | - | (23,188 | ) | - | (23,188 | ) | ||||||||||
Other income | 119 | - | 119 | - | ||||||||||||
Other expense | (5 | ) | (54 | ) | - | (74 | ) | |||||||||
Net income/ (loss) | $ | 2,607 | $ | (24,226 | ) | $ | 1,164 | $ | (28,645 | ) | ||||||
Earnings per unit: | ||||||||||||||||
Three Month | Three Month | Year ended | Year ended | |||||||||||||
Net income attributable to common units | $ | 1,250 | N/A | $ | 1,250 | N/A | ||||||||||
Earnings per unit: | ||||||||||||||||
Common unit (basic and diluted) | $ | 0.13 | N/A | $ | 0.13 | N/A | ||||||||||
NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | |||||||||
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS | |||||||||
(Expressed in thousands of U.S. Dollars) | |||||||||
Year ended | Year ended | ||||||||
Operating Activities | |||||||||
Net income/ (loss) | $ | 1,164 | $ | (28,645 | ) | ||||
Adjustments to reconcile net income/ (loss) to net cash provided by/ (used in) operating activities: | |||||||||
Depreciation and amortization | 19,509 | 19,508 | |||||||
Amortization of deferred finance fees and bond premium | 712 | 934 | |||||||
Non-cash loss on extinguishment of 2017 Notes | - | 5,442 | |||||||
Amortization of dry dock and special survey costs | 1,283 | 1,919 | |||||||
Changes in operating assets and liabilities: | |||||||||
Decrease/ (increase) in prepaid expenses and other current assets | 7 | (91 | ) | ||||||
Decrease/ (increase) in accounts receivable | 164 | (176 | ) | ||||||
Increase/ (decrease) in accounts payable | 351 | (59 | ) | ||||||
Increase in accrued expenses | 1,479 | 55 | |||||||
Increase/ (decrease) in due to related parties | 2,592 | (37,941 | ) | ||||||
Net cash provided by/ (used in) operating activities | $ | 27,261 | $ | (39,054 | ) | ||||
Investing Activities | |||||||||
Due from related parties | (52,314 | ) | (4,531 | ) | |||||
Net cash used in investing activities | $ | (52,314 | ) | $ | (4,531 | ) | |||
Financing Activities | |||||||||
Loan and senior notes proceeds, net of deferred financing costs | 124,027 | 332,883 | |||||||
Repayment of 2017 Notes | - | (354,693 | ) | ||||||
Cash remittance to Navios Acquisition | (214,854 | ) | - | ||||||
IPO proceeds, net of underwriting discount | 113,906 | - | |||||||
IPO expenses | (469 | ) | - | ||||||
Owner's net investment | 24,168 | 69,771 | |||||||
Net cash provided by financing activities | $ | 46,778 | $ | 47,961 | |||||
Net increase in cash and cash equivalents | 21,725 | 4,376 | |||||||
Cash and cash equivalents, beginning of year | 9,152 | 4,776 | |||||||
Cash and cash equivalents, end of year | $ | 30,877 | $ | 9,152 | |||||
Supplemental disclosures of cash flow information | |||||||||
Cash interest paid | $ | 27,786 | $ | 31,695 | |||||
Non-cash financing activities | |||||||||
Non-cash contributions by owners | $ | - | $ | - | |||||
Accrued IPO expenses | $ | 3,290 | - | ||||||
Assets and liabilities retained by Navios Acquisition: | |||||||||
Long-term debt | $ | 341,034 | - | ||||||
Due from related parties | $ | (88,070 | ) | - | |||||
Due to related parties | $ | 2,588 | - | ||||||
Deferred financing costs | $ | (7,405 | ) | - | |||||
EXHIBIT 2 | |||
Owned Vessels | Type | Built | Capacity (DWT) |
Shinyo Kieran | VLCC | 2011 | 297,066 |
Shinyo Saowalak | VLCC | 2010 | 298,000 |
Shinyo Kannika | VLCC | 2001 | 287,175 |
Shinyo Ocean | VLCC | 2001 | 281,395 |
Option Vessels(1) | Type | Built | Capacity (DWT) |
Nave Buena Suerte | VLCC | 2011 | 297,491 |
Nave Quasar | VLCC | 2010 | 297,376 |
Nave Galactic | VLCC | 2009 | 297,168 |
Nave Celeste | VLCC | 2003 | 298,717 |
Nave Neutrino | VLCC | 2003 | 298,287 |
Nave Electron | VLCC | 2002 | 305,178 |
C. Dream | VLCC | 2000 | 298,570 |
(1) | Navios Midstream has options, exercisable for a period of two years following the closing of the IPO on November 18, 2014, to acquire up to seven VLCCs at fair market value, from Navios Acquisition. | |
EXHIBIT 3 |
Disclosure of Non-GAAP Financial Measures
1. EBITDA
EBITDA represents net income plus interest and finance costs plus depreciation and amortization and income taxes.
EBITDA is presented because Navios Midstream believes that EBITDA is a basis upon which liquidity can be assessed and present useful information to investors regarding Navios Midstream's ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. EBITDA is a "non-GAAP financial measure" and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation.
2. Operating Surplus
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated maintenance and replacement capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Midstream's capital assets.
Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
3. Available Cash
Available Cash generally means for each fiscal quarter, all cash on hand at the end of the quarter:
less the amount of cash reserves established by the Board of Directors to:
provide for the proper conduct of Navios Midstream's business (including reserve for maintenance and replacement capital expenditures);
comply with applicable law, any of Navios Midstream's debt instruments, or other agreements; or
provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters;
plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.
Available Cash is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Available cash is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
4. Reconciliation of Non-GAAP Financial Measures
Historical | Historical | Pro Forma | |||||||||||
Net cash provided by operating activities | $ | 8,213 | $ | 12,232 | $ | 15,163 | |||||||
Net decrease in operating assets | (552 | ) | (109 | ) | (109 | ) | |||||||
Net decrease in operating liabilities | (2,627 | ) | (4,192 | ) | (4,192 | ) | |||||||
Net interest cost | 646 | 4,130 | 1,169 | ||||||||||
Amortization of deferred financing costs | (60 | ) | (158 | ) | (128 | ) | |||||||
EBITDA(1) | $ | 5,620 | $ | 11,903 | $ | 11,903 | |||||||
Cash paid for interest | - | (13,778 | ) | (1,041 | ) | ||||||||
Maintenance and replacement capital expenditures | (1,027 | ) | N/A | (2,148 | ) | ||||||||
Operating Surplus | $ | 4,593 | $ | N/A | $ | 8,714 | |||||||
Cash reserves | (831 | ) | N/A | (849 | ) | ||||||||
Available cash for distribution | $ | 3,762 | $ | N/A | $ | 7,865 | |||||||
(1) | |||||||||||||
Net cash provided by operating activities | $ | 8,213 | $ | 12,232 | $ | 15,163 | |||||||
Net cash used in investing activities | $ | - | $ | (13,408 | ) | $ | (13,408 | ) | |||||
Net cash provided by financing activities | $ | 22,610 | $ | 25,996 | $ | 25,996 | |||||||
