Navig8 Chemical Tankers Reports Results
Highlights
· Marked the first full quarter with an operating fleet after the Company accepted initial vessel deliveries of its newbuilding fleet during the first quarter of 2015.
· Reported revenue of $14 million and net gain of $2.9 million, or $0.07 per share, for the second quarter of 2015.
· Took delivery of six vessels from Korea's Hyundai Mipo Dockyard ("HMD").
· Entered into a $277 million sale and leaseback agreement with Ocean Yield ASA ("Ocean Yield") for eight newbuilding vessels.
· Successfully completed a $65 million private placement of 5,701,754 newly-issued shares, increasing the total shareholder funding to date to $404 million.
"We are very pleased to report results for our first full quarter with a meaningful on-the-water fleet. We achieved our first quarterly net gain and made significant progress toward completing the financing for our newbuilding program," said Nicolas Busch, Chief Executive Officer of Navig8 Chemical Tankers. "A huge increase in chemical export projects in the U.S. and Middle East and the corresponding increase in long-haul shipping demand to reach end markets makes our large chemical tankers ideally-suited for this expanding trade. The legacy chemical tanker fleet is more concentrated in smaller tankers better suited for shorter, regional trades. In addition we continue to benefit from our relationship with our sponsor, the Navig8 Group, who has provided us shipbuilding oversight, commercial and technical management, and related services since our inception."
Second Quarter 2015 Results
The Company reports a net gain of $2.9 million, or $0.07 per share, for the quarter ended June 30, 2015, compared with a net loss of $0.9 million, or $0.03 per share, for the preceding quarter.
The average daily time charter equivalent ("TCE") earned by our 37,000dwt IMO2 Interline coated tankers built at Hyundai Mipo, Korea ("A-Class vessels") and the 49,000dwt, IMO2 Epoxy coated medium range tankers built at Hyundai, Vinashin ("V-Class vessels") in the quarter ended June 30, 2015, were $19,090 per day and $20,112 per day, respectively. This is compared to the quarter ended March 31, 2015, where the TCE for the A-Class vessels was $18,542 per day and the TCE for the V-Class vessels was $21,670 per day. There was no operating revenue prior to the quarter ended March 31, 2015, as the Company previously had no vessels in operation. The Company had 11 vessels operating during the quarter ended June 30, 2015, compared with 5 vessels during the quarter ended March 31, 2015. All of the Company vessels operate in pools from which they derived TCE revenue.
Vessel and depreciation expense increased as the Company accepted initial deliveries of its newbuilding fleet.
General and administrative expense for the quarter ended June 30, 2015, were $1.8 million, which was at a similar level to the $1.9 million incurred for the quarter ended March 31, 2015.
Fleet Update
The Company has entered into contracts to acquire 32 modern, fuel-efficient newbuilding chemical tankers. As of the date of this press release, 14 of these vessels have been delivered and are in operation. The fleet is scheduled to be fully delivered by September 2017. Six additional vessels are scheduled to be delivered during the remainder of 2015, eight in 2016 and the final four in 2017.
During the first quarter of 2015, the Company took delivery of two V-Class vessels from the Hyundai Vinashin shipyard. These vessels are currently operating in Navig8 Group's Chronos8 pool. The Company also took delivery of three A-Class vessels from Hyundai Mipo, Korea. These vessels are currently operating in Navig8 Group's Delta8 pool.
During the second quarter of 2015, the Company took delivery of an additional six A-Class vessels. These vessels are also operating in the Navig8 Group's Delta8 pool. So far during the third quarter of 2015, the Company has taken delivery of a further three A-Class vessels.
Fleet List
|
Name |
DWT |
Yard |
Built |
Status |
||||||
|
Delivered Vessels |
||||||||||
|
1 |
Navig8 Victoria |
49,000 |
Hyundai Vinashin |
Q1 2015 |
Delivered |
|||||
|
2 |
Navig8 Almandine |
37,000 |
Hyundai Mipo |
Q1 2015 |
Delivered |
|||||
|
3 |
Navig8 Violette |
49,000 |
Hyundai Vinashin |
Q1 2015 |
Delivered |
|||||
|
4 |
Navig8 Amber |
37,000 |
Hyundai Mipo |
Q1 2015 |
Delivered |
|||||
|
5 |
Navig8 Amethyst |
37,000 |
Hyundai Mipo |
Q1 2015 |
Delivered |
|||||
|
6 |
Navig8 Ametrine |
37,000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
7 |
Navig8 Aventurine |
37,000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
8 |
Navig8 Andesine |
37,000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
9 |
Navig8 Aronaldo |
37,000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
10 |
Navig8 Aquamarine |
37.000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
11 |
Navig8 Amazonite |
37,000 |
Hyundai Mipo |
Q2 2015 |
Delivered |
|||||
|
12 |
Navig8 Amessi |
37.000 |
Hyundai Mipo |
Q3 2015 |
Delivered |
|||||
|
13 |
Navig8 Ammolite |
37,000 |
Hyundai Mipo |
Q3 2015 |
Delivered |
|||||
|
14 |
Navig8 Axinite |
37.000 |
Hyundai Mipo |
Q3 2015 |
Delivered |
|||||
|
Newbuildings |
||||||||||
|
1 |
Navig8 Azotic |
37,000 |
Hyundai Mipo |
Q3 2015 |
On order |
|||||
|
2 |
Navig8 Adamite |
37,000 |
Hyundai Mipo |
Q3 2015 |
On order |
|||||
|
3 |
Navig8 Azurite |
37,000 |
Hyundai Mipo |
Q3 2015 |
On order |
|||||
|
4 |
Navig8 Aragonite |
37,000 |
Hyundai Mipo |
Q4 2015 |
On order |
|||||
|
5 |
Navig8 Alabaster |
37,000 |
Hyundai Mipo |
Q4 2015 |
On order |
|||||
|
6 |
Navig8 Achroite |
37,000 |
Hyundai Mipo |
Q4 2015 |
On order |
|||||
|
7 |
Navig8 Turquoise |
49,000 |
STX |
Q1 2016 |
On order |
|||||
|
8 |
Navig8 Topaz |
49,000 |
STX |
Q2 2016 |
On order |
|||||
|
9 |
Navig8 Tourmaline |
49,000 |
STX |
Q3 2016 |
On order |
|||||
|
10 |
Navig8 Tanzanite |
49,000 |
STX |
Q3 2016 |
On order |
|||||
|
11 |
N8CT N/B (613) |
25,000 |
Kitanihon |
Q3 2016 |
On order |
|||||
|
12 |
N8CT N/B (617) |
25,000 |
Kitanihon |
Q3 2016 |
On order |
|||||
|
13 |
N8CT N/B (618) |
25,000 |
Kitanihon |
Q4 2016 |
On order |
|||||
|
14 |
N8CT N/B (620) |
25,000 |
Kitanihon |
Q4 2016 |
On order |
|||||
|
15 |
N8CT N/B (623) |
25,000 |
Kitanihon |
Q1 2017 |
On order |
|||||
|
16 |
N8CT N/B (625) |
25,000 |
Kitanihon |
Q2 2017 |
On order |
|||||
|
17 |
N8CT N/B (N-2075) |
25,000 |
Fukuoka |
Q2 2017 |
On order |
|||||
|
18 |
N8CT N/B (N-2076) |
25,000 |
Fukuoka |
Q3 2017 |
On order |
|||||
Corporate and Financing Update
On February 3, 2015, the Company closed its first debt financing facility. The facility will finance 14 of the Company's A-Class vessels. The loan facility covers approximately 60% of the contract price of the vessels and was closed in partnership with a group of European banks (Cr?dit Agricole Corporate and Investment Bank, ABN AMRO Bank N.V. and DVB Bank SE) and The Export-Import Bank of Korea.
On April 1, 2015, the Company entered into sale and leaseback agreements with Ocean Yield for eight of the Company's newbuildings: four A-Class vessels and four IMO2 Interline-coated 49,000 dwt chemical tankers being built at STX, Korea ("T-Class vessels"). The four A-Class vessels have contractual delivery dates ranging from June 2015 to September 2015 (two of the vessels were delivered during the second quarter), and the four T-Class vessels have deliveries scheduled from March 2016 to August 2016. The net proceeds from the transaction (after a 10% sellers' credit) are expected to be $277 million. Under the agreements, the eight vessels will be purchased by Ocean Yield from the Company upon their respective deliveries from HMD and STX. Simultaneously the Company agreed to bareboat charter the vessels for 15-year terms from Ocean Yield. The Company has purchase options that it can exercise to re-acquire the vessels during the charter period, with the first of such options exercisable on the fifth anniversary of each vessel delivery. Under the sale and leaseback agreements, Ocean Yield will also provide financing for the pre-delivery instalment payments for the Company's four T-Class vessels. These sale and leaseback agreements will be treated as financing transactions.
On April 1, 2015, the Company successfully completed a private placement resulting in net proceeds of $65 million. A total of 5,701,754 new common shares were issued in conjunction with the private placement at a subscription price of $11.40 per share. The Company now has a total of 38,489,108 shares outstanding. The proceeds of the private placement will be used to partially finance the equity portion of the Company's remaining newbuilding program, as well as for general corporate purposes including working capital. The private placement increased the total net equity funding from $339 million to $404 million as of June 30, 2015.
As a result of the financing arrangements described above, the Company has secured financing on all of the vessels ordered from HMD and STX (and therefore on all of the vessel deliveries scheduled in 2015 and part of the vessels scheduled for delivery in 2016). The two V-Class vessels that were delivered in the first quarter of 2015 are currently on 12-month bareboat charters which commenced at their respective delivery dates. The Company has purchase obligations at the end of these charters and will take ownership of these vessels during the first quarter of 2016. The Company is currently in the process of arranging financing for these two vessels and has also simultaneously started discussions in connection with the financing of the eight 25,000dwt IMO2 stainless steel tankers contracted at Kitanihon and Fukuoka (Japan) which are scheduled to start delivering in Q3 2016. The Company expects to have financing in place for the remaining unfinanced vessels well ahead of the respective deliveries.
Market Outlook
Chemical tanker earnings have strengthened since April, after a period of uncertainty following the collapse in commodity prices late last year. Market fundamentals have started to tighten, and we expect to see a major transformation, based on the start-up of a number of new chemical projects in the U.S. and Middle East. The investment in capacity in these two regions is export oriented and based on low-priced feedstocks, making them highly competitive in the international markets.
We anticipate the impact to our industry will be a sharp rise in long-haul chemical trades and hence growth in ton-mile demand. We believe this expected demand growth will exceed forecast fleet growth over the next two years. The majority of the current chemical tanker fleet is relatively small in size and is not best suited to meet this major transition in trade flows. Larger chemical tankers should have a distinct advantage in serving these new developments based on our current market outlook.
Conference Call
On Monday, August 17, 2015 at 4:00PM GMT, the Company's management team will host a conference call to discuss its results for the second quarter of 2015.
Participant should dial into the call 10 minutes before the scheduled time using the following number: 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please inform the operator you wish to listen to the Navig8 Chemical Tankers conference call.
A telephonic replay of the conference call will be available until August 24, 2015 by dialing +44 (0) 2036 088 021 (Standard International Dial In) and using access code 10070944.
Slides and Webcast
|
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES |
||||||||||||||||||||||||
|
Second Quarter 2015 |
First Quarter 2015 |
|||||||||||||||||||||||
|
37k dwt HMD Vessels |
49k dwt Vinashin Vessels |
37k dwt HMD Vessels |
49k dwt Vinashin Vessels |
|||||||||||||||||||||
|
Vessels on the water at the end of the month |
9 |
2 |
3 |
2 |
||||||||||||||||||||
|
Average distributed TCE in $ / day |
19,090 |
20,112 |
18,542 |
21,670 |
||||||||||||||||||||
|
Average opex in $ / day |
4,922 |
4,921 |
5,059 |
4,969 |
||||||||||||||||||||
|
Average Technical Management in $ / day |
470 |
493 |
493 |
493 |
||||||||||||||||||||
|
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES |
||||||||||||||||||||||||
|
For the three months ended 30 June |
For the six months ended 30 June |
|||||||||||||||||||||||
|
All in US$000, unless otherwise stated |
2015 |
2014 |
2015 |
2014 |
||||||||||||||||||||
|
Operating revenue |
||||||||||||||||||||||||
|
Vessel revenue |
$ |
13,956 |
- |
$ |
17,722 |
- |
||||||||||||||||||
|
Operating expenses |
||||||||||||||||||||||||
|
Vessel expenses |
(4,104 |
) |
- |
(5,292 |
) |
- |
||||||||||||||||||
|
Depreciation and amortization |
(3,000 |
) |
- |
(3,874 |
) |
- |
||||||||||||||||||
|
General and administrative expenses |
(1,805 |
) |
(839 |
) |
(3,691 |
) |
(1,330 |
) |
||||||||||||||||
|
Total operating expenses |
(8,909 |
) |
(839 |
) |
(12,857 |
) |
(1,330 |
) |
||||||||||||||||
|
Net operating gain/(loss) |
$ |
5,047 |
$ |
(839 |
) |
$ |
4,865 |
$ |
(1,330 |
) |
||||||||||||||
|
Financial Items |
||||||||||||||||||||||||
|
Interest income |
16 |
- |
26 |
- |
||||||||||||||||||||
|
Interest expense |
(2,210 |
) |
- |
(2,936 |
) |
- |
||||||||||||||||||
|
Net financial items |
(2,194 |
) |
- |
(2,910 |
) |
- |
||||||||||||||||||
|
Net gain/(loss) |
$ |
2,853 |
$ |
(839 |
) |
$ |
1,955 |
$ |
(1,330 |
) |
||||||||||||||
|
Earnings per common share: |
||||||||||||||||||||||||
|
Basic |
$ |
0.07 |
$ |
(0.03 |
) |
$ |
0.05 |
$ |
(0.08 |
) |
||||||||||||||
|
Diluted |
$ |
0.07 |
$ |
(0.03 |
) |
$ |
0.05 |
$ |
(0.08 |
) |
||||||||||||||
|
EBITDA: |
||||||||||||||||||||||||
|
Net gain/(loss) |
$ |
2,853 |
$ |
(839 |
) |
$ |
1,955 |
$ |
(1,330 |
) |
||||||||||||||
|
Depreciation and amortization |
3,000 |
- |
3,874 |
- |
||||||||||||||||||||
|
Interest income |
(16 |
) |
- |
(26 |
) |
- |
||||||||||||||||||
|
Interest expense |
2,210 |
- |
2,936 |
- |
||||||||||||||||||||
|
EBITDA |
$ |
8,047 |
$ |
(839 |
) |
$ |
8,739 |
$ |
(1,330 |
) |
||||||||||||||
|
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES |
|||||||||||||||
|
All in US$000, unless otherwise stated |
As of 30 June |
As of 31 December |
|||||||||||||
|
Assets |
|||||||||||||||
|
Current assets |
|||||||||||||||
|
Cash and cash equivalents |
$ |
40,883 |
$ |
40,405 |
|||||||||||
|
Trade receivables |
6,339 |
- |
|||||||||||||
|
Prepaid expenses and other assets |
8,634 |
25 |
|||||||||||||
|
Inventories |
894 |
- |
|||||||||||||
|
Total current assets |
56,750 |
40,430 |
|||||||||||||
|
Non-current assets |
|||||||||||||||
|
Restricted cash |
5,250 |
- |
|||||||||||||
|
Vessels, net |
336,695 |
- |
|||||||||||||
|
Vessels, finance lease |
83,822 |
- |
|||||||||||||
|
Vessels under construction |
221,132 |
284,826 |
|||||||||||||
|
Vessel related deposits |
- |
9,154 |
|||||||||||||
|
Total non-current assets |
646,899 |
293,980 |
|||||||||||||
|
Total assets |
$ |
703,649 |
$ |
334,410 |
|||||||||||
|
Liabilities and shareholders' equity |
|||||||||||||||
|
Current liabilities |
|||||||||||||||
|
Obligations under finance lease |
$ |
73,609 |
$ |
0 |
|||||||||||
|
Current portion of loans |
26,406 |
- |
|||||||||||||
|
Accounts payables and accrued expenses |
3,551 |
984 |
|||||||||||||
|
Total current liabilities |
103,566 |
984 |
|||||||||||||
|
Non-current liabilities |
|||||||||||||||
|
Long-term loans |
199,872 |
- |
|||||||||||||
|
Total liabilities |
303,438 |
984 |
|||||||||||||
|
Shareholders' equity |
|||||||||||||||
|
Common stock |
385 |
328 |
|||||||||||||
|
Paid-in capital |
403,641 |
338,868 |
|||||||||||||
|
Retained deficit |
(3,815 |
) |
(5,770 |
) |
|||||||||||
|
Total shareholders' equity |
400,211 |
333,426 |
|||||||||||||
|
Total liabilities and shareholders' equity |
$ |
703,649 |
$ |
334,410 |
|||||||||||
|
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES |
|||||||||||||||
|
For the six months ended 30 June |
|||||||||||||||
|
All in US$000, unless otherwise stated |
2015 |
2014 |
|||||||||||||
|
Operating activities: |
|||||||||||||||
|
Net gain/ (loss) |
$ |
1,955 |
$ |
(1,330 |
) |
||||||||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||||||||||
|
Depreciation and amortization |
3,874 |
- |
|||||||||||||
|
Changes in operating assets and liabilities: |
|||||||||||||||
|
Trade receivables |
(6,339 |
) |
- |
||||||||||||
|
Prepaid expenses and other assets |
(8,110 |
) |
- |
||||||||||||
|
Inventories |
(894 |
) |
- |
||||||||||||
|
Accounts payables |
633 |
277 |
|||||||||||||
|
Accrued expenses |
1,646 |
(863 |
) |
||||||||||||
|
Net cash used in operating activities |
(7,235 |
) |
(1,916 |
) |
|||||||||||
|
Investing activities |
|||||||||||||||
|
Changes in restricted cash |
(5,250 |
) |
- |
||||||||||||
|
Payments for vessels under construction |
(277,055 |
) |
(134,117 |
) |
|||||||||||
|
Net cash used in investing activities |
(282,305 |
) |
(134,117 |
) |
|||||||||||
|
Financing activities |
|||||||||||||||
|
Proceeds from issuance of common stock |
64,830 |
147,742 |
|||||||||||||
|
Proceeds from long-term bank loan |
229,092 |
- |
|||||||||||||
|
Repayment of long-term bank loan |
(2,814 |
) |
- |
||||||||||||
|
Repayment of finance lease |
(1,090 |
) |
- |
||||||||||||
|
Net cash provided by financing activities |
290,018 |
147,742 |
|||||||||||||
|
Increase in cash and cash equivalents |
478 |
11,709 |
|||||||||||||
|
Cash and cash equivalents, beginning of year / period |
40,405 |
11 |
|||||||||||||
|
Cash and cash equivalents, end of year / period |
$ |
40,883 |
$ |
11,720 |
|||||||||||
Forward-Looking Statements and Distribution
This press release contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Navig8 Chemical Tankers management's examination of historical operating trends. Although the Company believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Navig8 Chemical Tankers cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results to differ materially from those discussed in this press release include the strength of world economies and currencies, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the tanker market as a result of changes in OPEC's petroleum production levels and worldwide oil consumption and storage, changes in the Company's operating expenses including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors.
This communication is not for publication or distribution, directly or indirectly, in or into any state or jurisdiction into which doing so would be unlawful. The distribution of this communication may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes, should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. The Company assumes no responsibility in the event there is a violation by any person of such restrictions.
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