Frangou’s Navios Maritime Containers L.P. Benefits From Acquiring Fleet of 30 Containerships For a Price Close to Scrap Value
Navios Maritime Containers L.P., a growth vehicle dedicated to the container sector of the maritime industry, reported its financial results for the first quarter ended March 31, 2019.
Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results for the first quarter of 2019, where Navios Containers reported $31.8 million of Revenue and $12.0 million of EBITDA.”
Angeliki Frangou continued, “In a little more than two years, Navios Containers grew its fleet to 30 containerships, acquiring the fleet for a price close to the related scrap value. Most recently, Navios Containers acquired two 2011-built 10,000 TEU containerships for $105 million, reflecting a 30% discount to newbuild parity. These containerships are on long-term time charters at around $27,000 per day that should generate cumulative EBITDA of $35.2 million.”
HIGHLIGHTS — RECENT DEVELOPMENTS
$105.0 million acquisition of two 10,000 TEU, 2011-built containerships
On April 23, 2019, Navios Containers took delivery of a 2011-built 10,000 TEU containership. The vessel was acquired from an unrelated third party for a purchase price of $52.5 million. The containership is chartered out at a net rate of $26,325 per day until November 2020 and $27,300 per day until October 2021.
In February 2019, Navios Containers announced the exercise of an option to acquire a 2011-built 10,000 TEU containership from an unrelated third party for a purchase price of $52.5 million. The containership is chartered out at a net rate of $26,663 until July 2019, $26,325 per day until July 2021 and $27,300 per day until June 2022, and is expected to be delivered in the third quarter of 2019.
The vessels are being partially financed with a: (i) loan of up to $62.2 million from a commercial bank maturing in July 2023 and bearing interest at LIBOR plus 325 bps per annum and a (ii) $20.0 million credit by the seller for a period until January 2020 at a rate of 5.0% per annum.
Refinancing of existing facility
On March 13, 2019, Navios Containers drew $30.2 million in order to refinance an existing credit facility with an outstanding balance of $22.9 million. The facility is repayable in 18 equal consecutive quarterly installments of $0.7 million each, with a $17.5 million balloon payment on the last repayment date. The facility matures in July 2023 and bears interest at LIBOR plus 325 bps per annum.
The Company has no debt maturities until 2022.
Indexed Floating-Rate Time Charters
During the quarter we entered into indexed floating-rate time charters for two 4,250 TEU containerships through each of December 2020 and July 2021. The charter rate will be calculated according to the Container Ship Time Charter Assessment Index (ConTex) as published for a 4,250 TEU vessel for a 12 month period. The indexed charters provide us with long-term employment for our vessels while allowing us to benefit from a potential improvement in charter rates.
Navios Containers owns a fleet of 30 vessels, including one containership of which we expect to take delivery in the third quarter of 2019, totaling 152,821 TEU. The current average age of the fleet is 10.7 years (See Exhibit II). As of May 6, 2019, Navios Containers has chartered-out 55.7% and 15.6% of available days for the remaining nine months of 2019 and for 2020, respectively (excluding index-linked charters), which are expected to generate $75.2 million and $44.5 million in revenue, respectively. The average expected daily contracted charter-out rate for the fleet is $16,655 and $26,029 for the remaining nine months of 2019 and for 2020, respectively, and the total expected available days for the remaining nine months of 2019 and for 2020, are 8,105 days and 10,980 days, respectively.
For the following results and the selected financial data presented herein, Navios Containers has compiled consolidated statements of operations for the three month periods ended March 31, 2019 and 2018. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA is a non-U.S. GAAP financial measure and should not be used in isolation or as a substitute for Navios Containers’ results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
On November 30, 2018, in connection with our listing on the Nasdaq Global Select Market, we converted into a limited partnership at a ratio of one common share of Navios Maritime Containers Inc. for each common unit of Navios Containers.
Revenue for the three month period ended March 31, 2019 was $31.8 million, as compared to $29.9 million for the same period during 2018. The increase of $1.9 million was due to the increase in the number of vessels operating during the three month period ended March 31, 2019 and the resulting increase in the number of available days from 1,907 for the three month period ended March 31, 2018, to 2,471 for the three month period ended March 31, 2019, offset by the decrease in time charter rates reflecting primarily the expiration of a number of our legacy time charter contracts. TCE per day declined from $15,259 for the three month period ended March 31, 2018 to $12,217 for the same period during 2019, primarily as a result of the expiration of these contracts between the two periods.
Net Income for the three months ended March 31, 2019 was $0.1 million compared to $3.0 million for the same period in 2018. The $2.9 million decrease in Net income was mainly due to a: (i) $3.7 million decrease in EBITDA; (ii) $2.2 million increase in interest expense and finance cost, net related to the financing of new vessels; and (iii) $0.5 million increase in amortization of deferred drydock and special survey costs, in each case, relating to the increase in the size of the fleet. This overall resulting decrease of $6.4 million was partially offset by a $3.5 million decrease in depreciation and amortization expenses, relating mainly to the lower amortization of intangible assets.
EBITDA for the three months ended March 31, 2019 decreased by $3.7 million to $12.0 million as compared to $15.7 million for the same period in 2018. The decrease in EBITDA was primarily due to a: (i) $4.1 million increase in management fees mainly due to the increase of the available days from 1,907 days for the three month period ended March 31, 2018, to 2,471 days for the three month period ended March 31, 2019; (ii) $0.8 million increase in general and administrative expenses also mainly related to the growth in our fleet; and (iii) $0.8 million increase in time charter and voyage expenses. This overall resulting decrease of $5.7 million was partially offset by $1.9 million increase in revenue described above reflecting the growth in the number of vessels operating in the fleet during the period and a $0.1 million increase in other income/(expense) net.
Source: Navios Maritime Containers L.P.