Navig8 Chemical Tankers Inc. Reports Results for the Three and Twelve Months Ended December 31, 2015
OREANDA-NEWS. Navig8 Chemical Tankers Inc. (the "Company") (N-OTC: CHEMS), an international shipping company focused on the transportation of chemicals, today announced its unaudited financial and operating results for the three and twelve months ended December 31, 2015.
· Revenue of $35.3 million and net income of $9.1 million, or $0.24 per share, for the three months ended December 31, 2015.
· Entered into contracts to purchase five IMO2 49,000 DWT chemical tankers at STX Offshore & Shipbuilding with options to purchase five additional sister ships.
· Signed $52 million debt facility with DVB Bank SE to finance the purchase of two ECO 49,000 DWT chemical tankers on bareboat charter, one of which was purchased by the Company in December 2015.
· Continued growth of the Company's operating fleet with the delivery of 2 vessels; 19 vessels of the Company's 37-vessel newbuilding fleet had been delivered as of December 31, 2015.
· All delivered vessels have been deployed in pools managed by the Navig8 Group.
"We are pleased to report strong earnings results on the back of additional deliveries in our newbuilding program. Greater than half of our fleet has now been delivered, and we are beginning to generate substantial revenue," said Nicolas Busch, Chief Executive Office of Navig8 Chemical Tankers Inc.
"The increasing acceptance of vessels with Interline coatings among leading chemical industry participants as well as the continued increase in long-haul petrochemical trades, particularly the growing movement of methanol cargoes from the Caribbean and U.S. Gulf to Asia, has us very optimistic about our strategic position. We remain bullish on our outlook for increasing long-haul trades as additional chemical manufacturing capacity comes online in the U.S. and Middle East and China transitions from an industrial to a consumer led economy. We reaffirmed our commitment to this investment thesis by entering into contracts to purchase four IMO2 49,000 DWT Interline coated tankers in October and exercising an option to purchase a fifth sister ship in December."
The Company has entered into contracts to acquire 37 modern, fuel-efficient newbuilding chemical tankers. As of the date of this press release, 20 of these vessels have been delivered and are in operation. The fleet is scheduled to be fully delivered by September 2017. Eight additional vessels are scheduled to be delivered during the remainder of 2016, and the final nine in 2017. Upon their respective deliveries, the Company's vessels will be deployed in commercial pools managed by the Navig8 Group, including the Chronos8, Delta8 and Stainless8 pools. The Company's newbuilding fleet is composed of:
Eighteen IMO2 37,000 DWT Interline coated tankers built at Hyundai Mipo, Korea ("A-Class vessels"), all of which have been delivered. The A-Class vessels have been deployed in the Delta8 pool. The Company took delivery of two A-Class vessels during the three months ended December 31, 2015 and its final A-Class vessel in January 2016.
Nine IMO2 49,000 DWT Interline coated medium range tankers ("T-Class vessels") built at STX Offshore & Shipbuilding Co., Ltd. in Korea ("STX"). In October 2015, the Company entered into contracts to purchase four T-Class vessels to be built to the same technical specifications as the Company's preexisting orders with STX, including the capability to transport methanol and other specialty cargoes. The Company also announced that it had secured options to purchase six additional sister vessels from STX (each, an "Option vessel"). In December 2015, the Company announced that it had exercised an option to acquire, and entered into a contract to purchase, an Option vessel. The Company's nine T-Class vessels will be deployed in the Chronos8 pool. The Company expects four T-Class vessels to be delivered between April and September 2016 and the remaining five by June 2017.
Two IMO2 49,000 DWT Epoxy coated medium range tankers built at Hyundai, Vinashin ("V-Class vessels"). Both V-Class vessels were delivered on bareboat charters in the first quarter of 2015; the Company purchased one of these vessels pursuant to its purchase obligation in December 2015 and expects to purchase the other vessel in the first quarter of 2016. The V-Class vessels are currently deployed in the Chronos8 pool.
Eight IMO2 25,000 DWT stainless steel tankers built at Kitanihon and Fukuoka (Japan) ("S-Class vessels"). The S-Class vessels will be deployed in the Stainless8 pool. The Company expects four S-Class vessels to be delivered in 2016 and the remaining four by September 2017.
The two V-Class vessels, the Navig8 Victoria and the Navig8 Violette, were delivered to the Company earlier in 2015 under 12-month bareboat charters, which commenced at their respective delivery dates, with purchase obligations at the end of the charters. In December 2015, the Company entered into a $52 million debt facility to finance the purchase of the two V-Class vessels pursuant to its purchase obligations upon expiry of their bareboat charters. The loan facility covers approximately 65% of the purchase price of the vessels, and has been provided by DVB Bank SE. The Company took ownership of the Navig8 Victoria in December 2015 and expects to take ownership of the Navig8 Violette in March 2016.
The Company expects to have financing in place for the unfinanced T-Class and S-Class vessels well ahead of the respective deliveries.
Results for the three months ended December 31, 2015 and 2014
For the three months ended December 31, 2015, the Company reported net income of $9.1 million, or $0.24 per share, an increase of $11.1 million from a net loss of $2.0 million for the three months ended December 31, 2014, when the Company had not yet taken delivery of any of the vessels in its newbuilding program.
Results for the twelve months ended December 31, 2015 and 2014
For the twelve months ended December 31, 2015, the Company reported net income of $20.7 million, or $0.54 per share, an increase of $25.3 million from a net loss of $4.6 million for the twelve months ended December 31, 2014.
Management's Discussion and Analysis of Financial Results
Revenue for the three months ended December 31, 2015 was $35.3 million, compared to no revenue for the three months ended December 31, 2014. The total number of vessel operating days for the three months ended December 31, 2015 was 1,682, compared to 1,283 for the three months ended September 30, 2015 and zero for the three months ended December 31, 2014.
The gross average daily time charter equivalent ("TCE")(1) earned by the A-Class vessels and the V-Class vessels in the three months ended December 31, 2015, were $21,654 per day and $21,440 per day, respectively. The Company had 19 vessels operating during the three months ended December 31, 2015, all of which operate in pools from which they derive TCE revenue.
Vessel operating expenses were $10.3 million for the three months ended December 31, 2015, an increase of $10.3 million from the three months ended December 31, 2014, when the Company had not yet taken delivery of any of the vessels in its newbuilding program. Average fleet operating costs per day, including technical management fees, were approximately $5,441 for the three months ended December 31, 2015.
Depreciation expense for the three months ended December 31, 2015 was $6.6 million, an increase of $6.6 million compared to the three months ended December 31, 2014. This is due to the Company beginning to depreciate vessels in its newbuilding fleet as they are delivered.
General and administrative expenses for the three months ended December 31, 2015, were $2.3 million, an increase of $0.2 million from $2.0 million for the three months ended December 31, 2014. This increase is related to the growing size of the Company's fleet and hence various management and general administrative costs.
Interest expense for the three months ended December 31, 2015 was $7.0 million, as compared to no interest expense in the three months ended December 31, 2014, when the Company had not yet taken delivery of any of the vessels in its newbuilding program.
(1) Time charter equivalent, a non-US GAAP measure, is vessel revenues less voyage expenses (including bunkers and port charges but excluding pool commission).
On February 11, 2016 at 2:00PM GMT, the Company's management team will host a conference call to discuss its results for the three months ended December 31, 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 Inc. conference call.
A telephonic replay of the conference call will be available until February 18, 2016 by dialing +44 (0) 2036 088 021 (Standard International Dial In) and using access code 10080602.
About Navig8 Chemical Tankers Inc.
Navig8 Chemical Tankers Inc. was established in 2013 as a joint venture between the Navig8 Group and Oaktree Capital Management to capitalize on significant structural changes in the petrochemical industry and the continuing development of long-haul chemical trades. Its best-in-class newbuilding fleet is comprised exclusively of large, fuel-efficient vessels with modern eco-designs to take greatest advantage of these shifts. The fully delivered fleet will feature a complementary mix of primarily Interline-coated and stainless steel vessels that are capable of servicing the full range of conventional and specialized chemicals cargoes.
The Company has taken delivery of 20 chemical carriers and anticipates delivery of its full 37-vessel fleet by Q3 2017. The Company's fleet is contracted to operate in various chemical tanker pools managed by the Navig8 Group, the world's largest independent pool and commercial management company.
Navig8 Chemical Tankers Inc. is listed on the Norwegian OTC market under the symbol CHEMS.