SOURCE: Navig8 Chemical Tankers Inc.

Navig8 Chemical Tankers Inc.

May 10, 2016 08:00 ET

Navig8 Chemical Tankers Inc. Reports Results for the Three Months Ended March 31, 2016

NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND THE DISTRICT OF COLUMBIA) OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL

LONDON, UNITED KINGDOM--(Marketwired - May 10, 2016) - 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 months ended March 31, 2016.

Highlights

  • Generated revenue of $36.5 million and net income of $10.4 million, or $0.27 per share, for the three months ended March 31, 2016.
  • Expanded vessel operating days against a stable industry backdrop.
  • Continued growth of the Company's operating fleet with the delivery of two vessels; 20 vessels of the Company's 37-vessel newbuilding fleet had been delivered as of March 31, 2016.
  • All delivered vessels have been deployed in pools managed by the Navig8 Group.
  • Entered into $140.0 million sale and leaseback agreements with Bank of Communications Financial Leasing Co., Ltd ("BCFL") in April 2016 for four IMO2 49,000 DWT Interline coated medium range tankers being built at STX Offshore & Shipbuilding Co., Ltd. ("STX").
  • Issued $93.0 million in amortizing notes due 2027, guaranteed by The Export-Import Bank of Korea ("KEXIM") with an interest rate fixed at 2.90% per annum in April 2016.

"We continued to take timely deliveries of our newbuilding vessels in the first quarter and thus continued to expand our operating days," said Nicolas Busch, Chief Executive Officer of Navig8 Chemical Tankers Inc. "The daily rates we achieved were roughly in line with the prior quarter and remained strong despite unforeseen market dynamics. Notably, a decrease in palm oil production in South East Asia caused by the El Nino weather pattern contributed to a vessel oversupply in the region. This in turn mitigated the effect of strong demand for methanol cargoes to China, which we anticipate will remain a significant demand driver for the foreseeable future. Nonetheless, we generated incremental revenues and earnings per share on the back of organic fleet growth."

"We look forward to continuing to take deliveries of our newbuilding vessels, with a further seven deliveries expected to occur by the end of 2016. On a fully-delivered basis, Navig8 Chemical Tankers will be the largest independent owner of chemical tankers in the world. As we have previously stated, we anticipate that our focus on modern, large chemical tankers with specialized Interline 9001 and stainless steel coatings will provide a significant competitive advantage as the shift to long haul chemical trades continues." 

Fleet Update

The Company has entered into contracts to acquire 37 modern, fuel-efficient newbuilding chemical tankers. As of the date of this press release, 21 of these vessels have been delivered and are in operation. The fleet is scheduled to be fully delivered by September 2017. Seven 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 and have been deployed in the Delta8 pool. The Company took delivery of its final A-Class vessel during the three months ended March 31, 2016. 

Nine IMO2 49,000 DWT Interline coated medium range tankers ("T-Class vessels") built at 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 took delivery of its first T-Class vessel, the Navig8 Turquoise, in April 2016 and expects three T-Class vessels to be delivered between July and September 2016 and the remaining five by June 2017. The Navig8 Turquoise is the first of four T-Class vessels to be delivered to under the sale and leaseback arrangements with Ocean Yield ASA announced in April 2015.

Two IMO2 49,000 DWT Epoxy coated medium range tankers built at Hyundai, Vinashin ("V-Class vessels"). Both V-Class vessels were delivered to the Company on bareboat charters in the first quarter of 2015; the Company purchased one of these vessels in December 2015 and the other in March 2016 pursuant to purchase obligations. 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.

Financing Update

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 the Navig8 Violette in March 2016.

On April 7, 2016, the Company entered into sale and leaseback agreements with BCFL for four T-Class vessels. Under the sale and leaseback agreements, BCFL will provide funding for pre-delivery as well as the delivery instalments for these vessels. The net proceeds from the transaction (after a 12% sellers' credit) will be $140.0 million. The vessels will be delivered to BCFL on their respective deliveries from STX. The Company has entered into 10-year bareboat charters for the vessels, commencing upon their respective deliveries. The Company has purchase options to re-acquire the vessels during the charter period, with the first such option exercisable on the fourth anniversary of each vessel's delivery.

On April 29, 2016, a 100% indirect subsidiary of the Company issued $93.0 in aggregate principal amount guaranteed amortizing notes due 2027 (the "Notes") in a private offering to institutional buyers outside of the United States pursuant to Regulation S of the Securities Act of 1933, as amended. The interest rate for the Notes is fixed at 2.9% per annum. Payment of 100% of all regularly scheduled installments of principal of, and interest on, the Notes will be guaranteed by KEXIM. The Notes were issued in connection with the credit facility announced by the Company on February 3, 2015 (the "Credit Facility") and replace the bank notes previously issued by certain lenders under the Credit Facility. The Notes will not be listed on any securities exchange, listing authority or quotation system.

Results for the three months ended March 31, 2016 and 2015

For the three months ended March 31, 2016, the Company reported net income of $10.4 million, or $0.27 per share, an increase of $11.3 million from a net loss of $0.9 million for the three months ended March 31, 2015. The Company accepted its first two newbuilding deliveries in February of 2015 and therefore recognized little revenue during the three months ended March 31, 2015.

Revenue for the three months ended March 31, 2016 was $36.5 million, compared to revenue of $3.8 million for the three months ended March 31, 2015. The total number of vessel operating days for the three months ended March 31, 2016 increased to 1,682.

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 March 31, 2016, were $20,910 per day and $22,454 per day, respectively. The Company had 20 vessels operating during the three months ended March 31, 2016, all of which operate in pools from which they derive TCE revenue.

Vessel operating expenses were $11.3 million for the three months ended March 31, 2016, an increase of $10.1 million from the three months ended March 31, 2015, when the Company did not have meaningful vessel operations. Average fleet operating costs per day, including technical management fees, were approximately $5,670 for the three months ended March 31, 2016.

Depreciation expense for the three months ended March 31, 2016 was $7.3 million, an increase of $6.4 million compared to the three months ended March 31, 2015. The Company accepted its first two newbuilding deliveries in February of 2015 and begins to depreciate vessels in its newbuilding fleet as they are delivered. 

General and administrative expenses for the three months ended March 31, 2016, were $1.8 million, a decrease of $0.1 million from $1.9 million for the three months ended March 31, 2015. 

Interest expense for the three months ended March 31, 2016 was $5.8 million, an increase of $5.0 million from $0.7 million for the three months ended March 31, 2015 when the Company had only taken delivery of two 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).

Conference Call

On May 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 March 31, 2016.

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 May 18, 2016 by dialing +1 412 317 0088 (Standard International Dial In) and using access code 10085738.

Slides and Webcast

There will also be a live webcast of the conference call and slide presentation, available through the Company's website (www.navig8chemicaltankers.com). Participants on the live webcast should register on the website approximately 10 minutes before the start of the webcast.

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 21 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.

Visit our website: www.navig8chemicaltankers.com

 
 
NAVIG8 CHEMICAL TANKERS INC. AND SUBSIDIARIES
OTHER OPERATING DATA
(Unaudited)
 
    First Quarter 2016   Fourth Quarter 2015
    37k DWT HMD Vessels
("A-Class")
  49k DWT Vinashin Vessels ("V-Class")   37k DWT HMD Vessels
("A-Class")
  49k DWT Vinashin Vessels ("V-Class")
Vessels on the water at the end of the month   18   2   17   2
Total operating days   1,610   176   1,498   184
Average distributed Gross TCE in $ / day   20,910   22,454   21,654   21,440
Average OPEX in $ / day   5,635   5,982   5,437   5,473
                 
                 
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
         
  For the three months ended 31 Mar  
All in US$000, unless otherwise stated 2016   2015  
Operating revenue            
Vessel revenue $ 36,527   $ 3,766  
             
Operating expenses            
Vessel expenses   (11,284 )   (1,188 )
Depreciation and amortization   (7,281 )   (874 )
General and administrative expenses   (1,781 )   (1,881 )
Total operating expenses   (20,346 )   (3,943 )
Net operating income/(loss) $ 16,181   $ (177 )
             
Financial Items            
Interest income   11     10  
Interest expense   (5,786 )   (726 )
Other financial items   (7 )   (5 )
Net financial items   (5,782 )   (721 )
Net income/(loss) $ 10,399   $ (898 )
             
             
Earnings per common share:            
Basic $ 0.27   $ (0.03 )
Diluted $ 0.27   $ (0.03 )
             
EBITDA:            
Net income/(loss) $ 10,399   $ (898 )
Depreciation and amortization   (7,281 )   (874 )
Interest income   11     10  
Interest expense   (5,786 )   (726 )
Other financial items   (7 )   (5 )
EBITDA $ 23,462   $ 697  
             
             
NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
All in US$000, unless otherwise stated   As at 31 March
2016
  As at 31 December
2015
Assets        
             
Current assets            
  Cash and cash equivalents   $ 8,672   $ 18,438
  Trade receivables     17,847     15,161
  Prepaid expenses and other assets     10,960     10,897
  Inventories     2,198     2,008
Total current assets   $ 39,677   $ 46,504
             
Non-current assets            
  Restricted cash     19,400     16,000
  Vessels, net     734,313     663,891
  Vessels, capital lease     -     41,262
  Vessels under construction     155,241     147,505
Total non-current assets   $ 908,954   $ 868,658
             
Total assets   $ 948,631   $ 915,162
             
Liabilities and shareholders' equity            
             
Current liabilities            
  Obligations under capital lease     -     36,149
  Current portion of loans     74,383     56,777
  Accounts payables and accrued expenses     18,614     13,827
Total current liabilities   $ 92,997   $ 106,753
             
Non-current liabilities            
  Long-term loans, net of unamortised debt issuance cost     426,314     389,488
             
Total liabilities   $ 519,311   $ 496,241
             
Shareholders' equity            
             
  Common stock ($0.01 par value per share; 38,489,108 shares issued and outstanding as of March 31, 2016)     385     385
  Paid-in capital     403,641     403,641
  Retained earnings / (deficit)     25,294     14,895
Total shareholders' equity     429,320     418,921
             
Total liabilities and shareholders' equity   $ 948,631   $ 915,162
             
             

NAVIG8 CHEMICAL TANKERS INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
   
    For the three months ended 31 March  
All in US$000, unless otherwise stated   2016     2015  
Operating activities:                
Net income/ (loss)   $ 10,399       (898 )
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities:        
Depreciation of vessels     7,281       874  
Amortisation of debt issuance costs     148       -  
Amortisation of deferred financing charges     64       -  
Changes in operating assets and liabilities:                
  Trade receivables     (2,686 )     (2,595 )
  Prepaid expenses and other assets     (63 )     (3,126 )
  Inventories     (190 )     (603 )
  Accounts payables and accrued expenses     429       5,398  
Net cash used in operating activities     15,382       (950 )
                 
Investing activities                
Changes in restricted cash     (3,400 )     (2,250 )
Payments for vessels under construction     (39,769 )     (98,642 )
Payments for vessels, capital lease     (50 )     (1,694 )
Payments for vessels     -       (317 )
Net cash used in investing activities     (43,219 )     (102,903 )
                 
Financing activities                
Proceeds from loans, net of debt issuance costs     61,644       65,070  
Repayment of loans     (7,424 )     (416 )
Payment of obligation under finance lease     (36,149 )     (357 )
Net cash provided by financing activities     18,071       64,297  
                 
Increase (decrease) in cash and cash equivalents     (9,766 )     (39,556 )
Cash and cash equivalents, beginning of period     18,438       40,405  
Cash and cash equivalents, end of period   $ 8,672     $ 849  
                 
                 
Fleet List as of May 10, 2016            
                     
    Name   DWT   Yard   Built   Status
    Delivered Vessels                
1   Navig8 Victoria   49,000   Hyundai Vinashin   Q1 2015   Delivered
2   Navig8 Violette   49,000   Hyundai Vinashin   Q1 2015   Delivered
3   Navig8 Almandine   37,000   Hyundai Mipo   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
15   Navig8 Azotic   37,000   Hyundai Mipo   Q3 2015   Delivered
16   Navig8 Adamite   37,000   Hyundai Mipo   Q3 2015   Delivered
17   Navig8 Azurite   37,000   Hyundai Mipo   Q3 2015   Delivered
18   Navig8 Aragonite   37,000   Hyundai Mipo   Q4 2015   Delivered
19   Navig8 Alabaster   37,000   Hyundai Mipo   Q4 2015   Delivered
20   Navig8 Achroite   37,000   Hyundai Mipo   Q1 2016   Delivered
21   Navig8 Turquoise   49,000   STX   Q2 2016   Delivered
                     
    Newbuildings                
1   Navig8 Topaz   49,000   STX   Q3 2016   On order
2   Navig8 Tourmaline   49,000   STX   Q3 2016   On order
3   Navig8 Tanzanite   49,000   STX   Q3 2016   On order
4   Navig8 Sirius   25,000   Kitanihon   Q2 2016   On order
5   Navig8 Sky   25,000   Kitanihon   Q3 2016   On order
6   Navig8 Spark   25,000   Kitanihon   Q3 2016   On order
7   Navig8 Stellar   25,000   Kitanihon   Q4 2016   On order
8   Navig8 Saiph   25,000   Kitanihon   Q1 2017   On order
9   Navig8 Sceptrum   25,000   Kitanihon   Q2 2017   On order
10   Navig8 Spica   25,000   Fukuoka   Q2 2017   On order
11   Navig8 Sol   25,000   Fukuoka   Q2 2017   On order
12   Navig8 Tiffany   49,000   STX   Q1 2017   On order
13   Navig8 Tektite   49,000   STX   Q2 2017   On order
14   Navig8 Tremolite   49,000   STX   Q2 2017   On order
15   Navig8 Triphane   49,000   STX   Q2 2017   On order
16   Navig8 Thorite   49,000   STX   Q2 2017   On order
                     
                     

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 Inc. 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 Inc. 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 described from time to time in the reports filed by the Company on the Norwegian OTC trading support system.

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.

Contact Information

  • For Further Information, Please Contact:
    Nicolas Busch
    Chief Executive Officer
    + 44 207 467 5888

    Rose & Company
    +1 212 359 2228
    navig8chems@rosecoglobal.com