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Tanker Market Remains Difficult Despite Brighter Outlook says Angeliki Frangou, as Navios Maritime Acquisition Corporation Reports Return to Profitability

Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results today for the fourth quarter and the year ended December 31, 2020.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, “The pandemic materially impacted the tanker sector. In early 2020, collapsing oil demand drove the need for storage. As the pandemic progressed, the recession in the travel and entertainment industries migrated to oil transportation. While we believe the outlook looks brighter now, with countries well into vaccination programs and the travel industry showing signs of revival, the market remains difficult today.”

HIGHLIGHTS — RECENT DEVELOPMENTS

Delivery of the second VLCC

On February 17, 2021, a newbuilding very large crude carrier (“VLCC”) of 313,486 dwt under bareboat lease contract, the Erbil, was delivered from a Japanese shipyard.

The Erbil has been chartered out to a high-quality counterparty for a ten-year period at a bareboat rate of $27,816 net per day. The charter party has an option for an additional five-year period at a bareboat rate of $29,751 net per day.

Sale of vessels

In January 2021, Navios Acquisition sold the Allegro N, a 2014-built container vessel of 46,999 dwt, to an unaffiliated third party for a net sale price of $13.8 million.

In March 2021, Navios Acquisition sold the Nave Celeste, a 2003-built VLCC vessel of 298,717 dwt, to an unaffiliated third party for a net sale price of $23.5 million.

In March 2021, Navios Acquisition sold the Solstice N, a 2007-built container vessel of 44,023 dwt, to an unaffiliated third party for a net sale price of $10.8 million.

Navios Acquisition entered into agreements to sell both the Acrux N, a 2010-built container vessel of 23,338 dwt, and the Vita N, a 2010-built container vessel of 23,359 dwt, to an unaffiliated third party for an aggregate net sale price of $18.0 million. The vessels are expected to be delivered to their new owners in the second quarter of 2021.

Debt developments

During the fourth quarter and full year of 2020, Navios Acquisition repurchased $36.4 million and $55.4 million of its 8 1/8% First Priority Ship Mortgages (the “Ship Mortgage Notes”).

As of December 31, 2020, Navios Acquisition had reduced its outstanding debt by $96.5 million as compared to the year ended December 31, 2019, representing 9% of debt outstanding as of December 31, 2020, excluding the debt associated with the container vessels that are accounted for as held for sale.

During the first quarter of 2021, as already announced on April 13, 2021, Navios Acquisition entered into a secured loan agreement with a subsidiary of N Shipmanagement Acquisition Corp., an entity affiliated with Navios Acquisition’s Chairman and Chief Executive Officer, for a loan of up to $100.0 million to be used for general corporate purposes (the “Loan”). The Loan has a term of two years, scheduled amortization and bears interest at a rate of 11% per annum, payable quarterly. Navios Acquisition may elect to defer all scheduled amortization and interest payments, in which case the applicable interest rate is 12.5% per annum. To date, Navios Acquisition has drawn $18.0 million.

Since the start of 2021 to date, Navios Acquisition has further reduced its indebtedness by a net amount of $63.4 million through debt amortization payments and repayment of debt maturities, including the repayment of the debt associated with the container vessels that are accounted for as held for sale.

Our Ship Mortgage Notes mature on November 15, 2021. Although we are currently attempting to refinance the outstanding amount of our Ship Mortgage Notes and have also engaged in discussions with the holders of our Ship Mortgage Notes, there can be no assurance we will be successful in such attempts or that any such potential refinancing, sales or other action, will be consummated on terms satisfactory to us or at all.

Dividends

The Board of Directors of Navios Acquisition has decided to suspend its quarterly dividend to its stockholders, including the dividend for the quarter ended December 31, 2020. The Board believes such a decision is in the best long-term interests of the Company and its stockholders.

Fleet employment

As of April 7, 2021, Navios Acquisition’s core fleet consisted of a total of 46 vessels, of which 13 are VLCCs (including two bareboat chartered-in VLCCs expected to be delivered in each of the third quarter of 2021 and the third quarter of 2022), 31 are product tankers and two are chemical tankers. Navios Acquisition also owns five containerships that are accounted for as held for sale.

Currently, Navios Acquisition has contracted 76.9% of its available days of its core fleet on a charter-out basis for 2021. The average base contractual net daily charter-out rate for the 67.2% of available days that are contracted on base rate and on base rate with profit sharing arrangements is expected to be $18,327.

EBITDA, Adjusted EBITDA, Adjusted net income/ (loss) and Adjusted earnings/ (loss) per share (basic and diluted) are non-GAAP financial measures and should not be used in isolation or substitution for Navios Acquisition’s results (see Exhibit II for reconciliation of EBITDA and Adjusted EBITDA).

Three month periods ended December 31, 2020 and 2019

Revenue for the three month period ended December 31, 2020 decreased by $12.8 million, or 15.0%, to $72.6 million, as compared to $85.4 million for the same period of 2019. The decrease was mainly attributable to a decrease in market rates during the three month period ended December 31, 2020 as compared to the same period of 2019; partially mitigated by an increase in revenue by $4.5 million due to the acquisition of five product tankers from Navios Europe I in December 2019 and by $5.8 million due to the acquisition of seven containerships from Navios Europe II in June 2020; partially mitigated by the sale of three VLCCs in 2019. Available days of the fleet increased to 4,574 days for the three month period ended December 31, 2020, as compared to 3,429 days for the three month period ended December 31, 2019, due to the reasons mentioned above. The time charter equivalent rate, or TCE Rate, decreased to $14,608 for the three month period ended December 31, 2020, from $22,484 for the three month period ended December 31, 2019.

Time charter and voyage expenses for the three month period ended December 31, 2020 decreased by $2.7 million, or 32.1%, to $5.7 million, as compared to $8.4 million for the same period of 2019. The decrease was mainly attributable to a: (i) $2.8 million decrease in bunkers and voyage expenses related to the spot voyages incurred in the period; and (ii) $0.3 million decrease in brokers’ commission costs; partially mitigated by $0.4 million increase in port expenses.

Net loss was $7.5 million for the three month period ended December 31, 2020 as compared to $6.6 million net income for the same period of 2019. Net loss was affected by the items described in the table above. Excluding these items, Adjusted net loss for the three month period ended December 31, 2020 was $12.9 million as compared to $4.9 million Adjusted net income for the same period of 2019. The decrease in Adjusted net income was mainly attributable to: (i) an $18.4 million decrease in Adjusted EBITDA; (ii) a $1.1 million increase in direct vessel expenses (in relation to amortization of dry dock and special survey cost); (iii) a $1.1 million increase in depreciation and amortization; and (iv) a $0.9 million decrease in interest income; partially mitigated by a $3.7 million decrease in interest expense and finance cost (excluding write off of deferred finance costs).

EBITDA for the three month periods ended December 31, 2020 and 2019 was affected by items described in the table above. Excluding these items, Adjusted EBITDA for the three month period ended December 31, 2020 decreased by $18.4 million to $25.8 million, as compared to $44.2 million for the same period of 2019. The decrease in Adjusted EBITDA was mainly due to a: (i) $12.8 million decrease in revenue; (ii) $7.5 million increase in vessel operating expenses primarily due to the increase in the size of our fleet as discussed above; (iii) $1.3 million increase in general and administrative expenses (excluding stock-based compensation) mainly due to the increase in the size of our fleet as discussed above; and (iv) $0.3 million decrease in equity in net earnings of affiliated companies; partially mitigated by a: (i) $2.7 million decrease in time charter and voyage expenses; (ii) $0.5 million decrease in direct vessel expenses (other than amortization of dry dock and special survey cost); and (iii) $0.3 million increase in other income.

Year ended December 31, 2020 and 2019

Revenue for the year ended December 31, 2020 increased by $81.3 million, or 29.0%, to $361.4 million, as compared to $280.1 million for the same period of 2019. The increase was mainly attributable to an: (i) increase in revenue by $27.4 million due to the acquisition of five product tankers from Navios Europe I in December 2019 and by $10.9 million due to the acquisition of seven containers from Navios Europe II in June 2020; and (ii) increase in market rates during the year ended December 31, 2020 as compared to the same period of 2019; partially mitigated by the sale of three VLCCs in 2019. Available days of the fleet increased to 16,708 days for the year ended December 31, 2020, as compared to 14,107 days for the year ended December 31, 2019, due to the reasons mentioned above. The TCE Rate increased to $20,566 for the year ended December 31, 2020, from $18,248 for the year ended December 31, 2019.

Time charter and voyage expenses for the year ended December 31, 2020 decreased by $4.9 million to $17.8 million as compared to $22.7 million for the year ended December 31, 2019. The decrease was mainly attributable to a: (i) $4.6 million decrease in bunkers and voyage expenses related to the spot voyages incurred in the period; and (ii) $2.1 million decrease in port expenses; partially mitigated by a $1.8 million increase in brokers’ commission costs.

Net income was $27.6 million for the year ended December 31, 2020 as compared to $65.4 million Net loss for the same period of 2019. Net income was affected by the items described in the table above. Adjusted net income for the year ended December 31, 2020 was $30.7 million as compared to $29.3 million Adjusted net loss for the same period of 2019. The increase in Adjusted net income was mainly attributable to a: (i) $60.3 million increase in Adjusted EBITDA; (ii) $10.0 million decrease in interest expense and finance cost (excluding write off of deferred finance costs); and (iii) $1.3 million decrease in depreciation and amortization; partially mitigated by a: (i) $7.7 million decrease in interest income; and (ii) $3.9 million increase in direct vessel expenses (in relation to amortization of dry dock and special survey cost).

EBITDA for years ended December 31, 2020 and 2019 was affected by items described in the table above. Excluding these items, Adjusted EBITDA affected by the items described in the table above, for the year ended December 31, 2020 increased by $60.3 million to $191.8 million, as compared to $131.5 million for the same period of 2019. The increase in Adjusted EBITDA was mainly due to: (i) an $81.3 million increase in revenue; and (ii) a $4.9 million decrease in time charter and voyage expenses; partially mitigated by a: (i) $19.9 million increase in vessel operating expenses primarily due to the increase in the size of our fleet as discussed above; (ii) $2.9 million decrease in equity in net earnings of affiliated companies; (iii) $1.1 million increase in other expense; (iv) $1.0 million decrease in other income; and (v) $1.0 million increase in general and administrative expenses (excluding stock-based compensation) mainly due to the increase in the size of our fleet as discussed above.

Source: Navios Maritime Acquisition Corporation

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