LONDON, UNITED KINGDOM--(Marketwired - Feb 11, 2016) - Navig8 Product Tankers Inc. (the "Company") (N-OTC: EIGHT), an international shipping company focused on the transportation of petroleum products, today announced its unaudited financial and operating results for the three and twelve months ended December 31, 2015.
Highlights
- Reported revenue of $9.1 million and net income of $0.2 million, or $0.003 per share, for the three months ended December 31, 2015.
- Entered into $64.3 million secured commercial loan facility to finance the first two of the Company's eight 74,000 DWT LR1 product tanker newbuildings under construction at STX Offshore & Shipbuilding Co., Ltd. ("STX") in November 2015.
- Increased secured commercial loan facility to $128.5 million in January 2016 to provide incremental financing for two additional 74,000 DWT LR1 product tankers being built at STX.
- Accepted delivery of the first LR1 newbuilding from STX as well as one 110,000 DWT LR2 product tanker newbuilding from Sungdong Shipbuilding & Marine Engineering Co.
- Accepted delivery of an incremental two LR1 and two LR2 product tankers in January 2016.
"We are pleased to report that we have begun to take deliveries of our newbuilding fleet and have taken further steps to finance the newbuilding program. Thus far, we have closed senior debt, and sale and leaseback, financings for 19 vessels, including four since the third quarter ended. Our newbuilding program is substantially funded at this point, and we are in advanced discussions for financing the remaining vessels," said Nicolas Busch, Chief Executive Officer of Navig8 Product Tankers. "We expect our newbuilding fleet to be fully delivered by the end of 2016 and well-positioned to begin to generate significant cash flow on the back of anticipated growth in long-haul trades resulting from new large projects in the Middle East and North America and the corresponding increase in long-haul shipping demand to reach end-markets. We continue to benefit from our relationship with our sponsor, the Navig8 Group, which has provided us with construction supervision, commercial and technical management, and related services since our inception."
Fleet Update
The Company entered into contracts to acquire 30 modern, fuel-efficient newbuilding product tankers. During the second quarter of 2015, the Company entered into an agreement with an unrelated third party to sell three LR2 vessels which were under construction at Sungdong Shipbuilding & Marine Engineering Co, Ltd, Korea, for total sale proceeds of $178.5 million. One of the three vessels was delivered to the buyer in the second quarter of 2015 and the other two vessels were delivered to the buyer in the third quarter of 2015, realizing a total net gain on sale of $24.1 million.
As of the date of this release six of these vessels have been delivered and are in operation. The fleet is expected to be fully delivered by December 2016. Upon their respective deliveries, the Company's vessels will be deployed in the LR8 and Alpha8 commercial pools, both managed by the Navig8 Group. The Company's newbuilding fleet comprises:
Seven 110,000 DWT LR2 product tankers (the "Sungdong vessels") built at Sungdong Shipbuilding & Marine Engineering Co. ("Sungdong"). The Company took delivery of the first of the Sungdong vessels in November 2015 and two additional Sungdong vessels in January 2016. The delivered Sungdong vessels operate in Navig8 Group's Alpha8 pool. The Company expects the remaining four Sungdong vessels will be delivered between February and July 2016.
Eight 113,000 DWT LR2 product tankers (the "CSSC vessels") built at CSSC Offshore & Marine Engineering (Group) Company Limited ("CSSC Offshore"), formerly known as Guangzhou Shipyard International Company. The Company's eight CSSC vessels will operate in Navig8 Group's Alpha8 pool. The Company expects to take delivery of the CSSC vessels between March and December 2016.
Eight 74,000 DWT LR1 product tankers (the "STX vessels") built at STX Offshore & Shipbuilding Co. Ltd. ("STX"). The Company took delivery of the first of the STX vessels in November 2015 and two additional STX vessels in January 2016. The delivered STX vessels operate in Navig8 Group's LR8 pool. The Company expects the remaining five STX vessels will be delivered between February and May 2016.
Four 74,000 DWT LR1 product tankers (the "SPP vessels") built at SPP Shipbuilding Co., Ltd. ("SPP"). The Company's four SPP vessels will operate in Navig8 Group's LR8 pool. The Company expects to take delivery of the SPP vessels between July and December 2016.
Additionally, the Company has three ECO LR2 vessels on time charter operating in Navig8 Group's Alpha8 Pool. These time charters expire between July and October 2016.
Financing Update
On 12 March 2015, the Company entered into a Pool Management Revenue Share Rights Agreement with Navig8 Asia Pte Ltd. and Navig8 Limited. Pursuant to this agreement, the Company will place each of its 27 newbuilding vessels into Navig8 Group's Alpha8 and LR8 Pools upon delivery. The Company will also receive a 30% share of the net revenues derived from the commercial management of the two pools. In consideration for the Pool Management Revenue Share Rights Agreement, 336,963 shares of common stock of the Company, amounting to $4.1 million, were issued to Navig8 Ltd. at an issuance price of $12.25 per share.
On 25 June 2015, the Company entered into sale and leaseback agreements with CSSC (Hong Kong) Shipping Company Limited ("CSSC") for all of the CSSC vessels. The net proceeds from the transaction (after a 20% sellers' credit) are expected to amount to $304 million. Under the agreements, the CSSC vessels will be purchased by CSSC from the Company upon their deliveries from CSSC Offshore. The Company has entered into 10-year bareboat charters for the vessels, commencing on delivery. The Company has a purchase obligation to re-acquire the vessels at the end of the charter period and purchase options to re-acquire during the charter period, with the first option exercisable on the fourth anniversary of each vessel delivery. Under the sale and leaseback agreements, CSCC will also provide financing for the pre-delivery instalments for the vessels. These sale and leaseback agreements will be treated as financing transactions. As of December 31, 2015, $19.1 million has been drawn down on the pre-delivery financing facility.
On July 10, 2015, the Company entered into sale and leaseback agreements with Ocean Yield for four Sungdong vessels. These vessels have scheduled delivery dates between February and July 2016. The net proceeds from the transaction (after a 5% sellers' credit) are expected to amount to $188.1 million. Under the agreements, the four vessels will be purchased by Ocean Yield from the Company on their respective deliveries from Sungdong. The Company has entered into 13-year bareboat charters for the vessels commencing on delivery, and has purchase options to re-acquire the vessels during the charter period, with the first of such option exercisable on the seventh anniversary of each vessel delivery. Under the sale and leaseback agreements, Ocean Yield will also provide financing for the pre-delivery instalments for the vessels. These sale and leaseback agreements will be treated as financing transactions. As of December 31, 2015, $64.4 million has been drawn down on the pre-delivery financing facility with Ocean Yield.
In November 2015, the Company announced the closing of a $64.3 million secured commercial loan facility with Credit Agricole Corporate and Investment Bank ("CACIB") for the first two of the Company's eight STX vessels. The debt financing covers approximately 65% of the contract price of each of these two vessels, the first of which was delivered in November 2015. In January 2016, the Company announced that it had entered into an amended secured commercial loan facility for $128.5 million with CACIB and BNP Paribas to provide additional financing for the third and fourth newbuilding vessels at STX.
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 $0.2 million, or $0.003 per share, a decrease of $0.9 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 and had therefore not begun to depreciate vessels in its fleet.
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 $26.7 million, or $0.67 per share, an increase of $27.9 million from a net loss of $1.2 million for the twelve months ended December 31, 2014. Of the increase, $24.1 million relates to the gain on sale of three vessels to an unrelated third party.
Management's Discussion and Analysis of Financial Results
Revenue for the three months ended December 31, 2015 was $9.1 million, compared to $7.7 million for the three months ended December 31, 2014. The total number of vessel operating days for the three months ended December 31, 2015 was 364, compared to 276 for the three months ended September 30, 2015 and 252 for the three months ended December 31, 2014.
The average daily time charter equivalent ("TCE")(1) earned by our three 115,000DWT LR2 chartered-in tankers in the three months ended December 31, 2015, was $26,104 per day. The gross average daily TCE for our owned vessels were $23,235 and $27,364 for our 74,000 DWT LR1 and 110,000 DWT LR2 vessels, respectively. These rates were achieved over an aggregate of 88 operating days for our two owned vessels that were delivered in November 2015.
Vessel operating expenses across our owned and chartered in fleet were $6.6 million for the three months ended December 31, 2015, slightly above the prior quarter when our fleet was limited to chartered-in vessels. Average daily operating expenses were approximately $5,304 for each of the two classes of owned vessels.
Depreciation expense for the three months ended December 31, 2015 was $0.5 million, an increase of $0.5 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 $1.4 million, an increase of $0.2 from the three months ended December 31, 2014. This increase is related to the growing size of the company's operations and hence various management and administrative fees.
Interest expense for the three months ended December 31, 2015 was $3.5 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).
About Navig8 Product Tankers Inc.
Navig8 Product Tankers was established in 2013 as a joint venture between the Navig8 Group and DVB Bank to capitalize on anticipated strong supply/demand fundamentals and the accelerating growth of long-haul clean and dirty oil product cargo movements, driven by increasing geographic dislocations between producers and consumers.
Navig8 Product Tankers maintains an orderbook of long-range (LR), eco-design product tankers, comprising 15 LR2 and 12 LR1 vessels. The company's fleet is contracted to operate in various product tanker pools managed by the Navig8 Group, the world's largest independent pool and commercial management company.
Navig8 Product Tankers is listed on the Norwegian OTC market under the symbol EIGHT.
Visit our website at www.navig8producttankers.com.
| NAVIG8 PRODUCT TANKERS INC AND SUBSIDIARIES | ||||
| OTHER OPERATING DATA | ||||
| (Unaudited) | ||||
| Fourth Quarter 2015 | Third Quarter 2015 | |||
| 115k DWT LR2 Vessels | 115k DWT LR2 Vessels | |||
| Number of chartered-in vessels on the water at the end of the quarter | 3 | 3 | ||
| Total operating days | 276 | 276 | ||
| Average Earnings in $ / day | 26,104 | 43,679 | ||
| Average Hire in $ / day | 21,857 | 21,858 | ||
| Fourth Quarter 2015 | ||||
| 74k DWT LR1 Vessels | 110k DWT LR2 Vessels | |||
| Number of owned vessels on the water at the end of the quarter | 1 | 1 | ||
| Total operating days | 50 | 38 | ||
| Average distributed Gross TCE in $ / day | 23,235 | 27,364 | ||
| Average OPEX in $ / day | 5,268 | 5,351 | ||
| NAVIG8 PRODUCT TANKERS INC AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
| (Unaudited) | ||||||||||||||||
| For the three months ended 31 Dec | For the twelve months ended 31 Dec | |||||||||||||||
| All in US$000, unless otherwise stated | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Operating revenue | ||||||||||||||||
| Vessel revenue | $ | 9,078 | 7,719 | $ | 38,226 | 11,588 | ||||||||||
| Total Operating Revenue | 9,078 | 7,719 | 38,226 | 11,588 | ||||||||||||
| Gain on sale of vessels | 3,144 | - | 24,144 | - | ||||||||||||
| Operating expenses | ||||||||||||||||
| Vessel expenses | (6,570 | ) | (5,584 | ) | (24,762 | ) | (9,564 | ) | ||||||||
| Depreciation | (466 | ) | - | (466 | ) | - | ||||||||||
| General and administrative expenses | (1,436 | ) | (1,193 | ) | (7,020 | ) | (3,658 | ) | ||||||||
| Total operating expenses | (8,472 | ) | (6,777 | ) | (32,248 | ) | (13,222 | ) | ||||||||
| Net operating gain / (loss) | $ | 3,750 | $ | 942 | $ | 30,122 | $ | (1,634 | ) | |||||||
| Financial Items | ||||||||||||||||
| Interest income | 10 | 165 | 119 | 414 | ||||||||||||
| Interest expense | (3,528 | ) | - | (3,528 | ) | - | ||||||||||
| Gain on foreign exchange | 4 | - | 12 | 3 | ||||||||||||
| Net financial items | (3,514 | ) | 165 | (3,397 | ) | 417 | ||||||||||
| Corporate Tax | (69 | ) | - | (69 | ) | - | ||||||||||
| Net income / (loss) | $ | 167 | $ | 1,107 | $ | 26,656 | $ | (1,217 | ) | |||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.00 | $ | 0.03 | $ | 0.67 | $ | (0.03 | ) | |||||||
| Diluted | $ | 0.00 | $ | 0.03 | $ | 0.67 | $ | (0.03 | ) | |||||||
| NAVIG8 PRODUCT TANKERS INC AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| All in US$000, unless otherwise stated | As at 31 December 2015 | As at 31 December 2014 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 4,480 | $ | 114,147 | ||||
| Restricted cash | 435 | - | ||||||
| Trade receivables | 6,474 | 3,644 | ||||||
| Prepaid expenses and other assets | 11,773 | 5,070 | ||||||
| Inventories | 310 | - | ||||||
| Total current assets | $ | 23,472 | $ | 122,861 | ||||
| Non-current assets | ||||||||
| Restricted cash | 2,000 | - | ||||||
| Vessels, net | 100,886 | - | ||||||
| Vessels under construction | 451,504 | 284,553 | ||||||
| Vessel related deposits | - | 1,950 | ||||||
| Other Assets | 3,654 | - | ||||||
| Total non-current assets | $ | 558,044 | $ | 286,503 | ||||
| Total assets | $ | 581,516 | $ | 409,364 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Current portion of loans | 87,754 | - | ||||||
| Accounts payables and accrued expenses | 7,856 | 653 | ||||||
| Total current liabilities | $ | 95,610 | $ | 653 | ||||
| Non-current liabilities | ||||||||
| Long term loans, net of unamortised debt issuance cost | 45,399 | - | ||||||
| Total liabilities | $ | 141,009 | $ | 653 | ||||
| Shareholders' equity | ||||||||
| Common stock | 398 | 394 | ||||||
| Paid-in capital | 415,104 | 409,968 | ||||||
| Retained earnings / (deficit) | 25,005 | (1,651 | ) | |||||
| Total shareholders' equity | 440,507 | 408,711 | ||||||
| Total liabilities and shareholders' equity | $ | 581,516 | $ | 409,364 | ||||
| NAVIG8 PRODUCT TANKERS INC AND SUBSIDIARIES |
|||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||||||
| (Unaudited) | |||||||||
| For the twelve months ended 31 December | |||||||||
| All in US$000, unless otherwise stated | 2015 | 2014 | |||||||
| Operating activities: | |||||||||
| Net income / (loss) | $ | 26,656 | $ | (1,217 | ) | ||||
| Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities: | |||||||||
| Shares issued for services | 1,012 | - | |||||||
| Gain on sale of vessel | (24,144 | ) | - | ||||||
| Depreciation | 466 | - | |||||||
| Amortisation | 664 | - | |||||||
| Amortisation of deferred financing charges, debt issuance cost and debt premium | 3,279 | - | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Restricted cash | - | - | |||||||
| Trade receivables, prepaid expenses and other assets | (9,725 | ) | (8,647 | ) | |||||
| Inventories | (310 | ) | - | ||||||
| Accounts payables and accrued expenses | 998 | 180 | |||||||
| Net cash used in operating activities | (1,104 | ) | (9,684 | ) | |||||
| Investing activities | |||||||||
| Changes in restricted cash | (2,435 | ) | - | ||||||
| Net proceeds from sale of vessel | 103,000 | - | |||||||
| Payments for vessels under construction | (341,294 | ) | (181,488 | ) | |||||
| Refund/ (payment) of Vessels related deposit | 1,950 | (1,950 | ) | ||||||
| Net cash used in investing activities | (238,779 | ) | (183,438 | ) | |||||
| Financing activities | |||||||||
| Proceeds from issuance of common stock | - | 93,555 | |||||||
| Proceeds from financing arrangements, net of debt issuance cost | 130,552 | - | |||||||
| Repayment of loans | (336 | ) | - | ||||||
| Net cash provided by financing activities | 130,216 | 93,555 | |||||||
| Increase in cash and cash equivalents | (109,667 | ) | (99,567 | ) | |||||
| Cash and cash equivalents, beginning of year / period | 114,147 | 213,714 | |||||||
| Cash and cash equivalents, end of year / period | $ | 4,480 | $ | 114,147 | |||||
| Fleet List as of February 11, 2016 | ||||||||||
| Name | DWT | Yard | Built | Status | ||||||
| Delivered Vessels | ||||||||||
| 1 | Captain John | 115,000 | HHI | Q2 2014 | Chartered-in | |||||
| 2 | Captain Paris | 115,000 | HHI | Q2 2014 | Chartered-in | |||||
| 3 | Captain Spiro | 115,000 | HHI | Q2 2014 | Chartered-in | |||||
| 4 | Navig8 Solidarity | 110,000 | Sungdong | Q4 2015 | Delivered | |||||
| 5 | Navig8 Stability | 110,000 | Sungdong | Q1 2016 | Delivered | |||||
| 6 | Navig8 Solace | 110,000 | Sungdong | Q1 2016 | Delivered | |||||
| 7 | Navig8 Excel | 74,000 | STX | Q4 2015 | Delivered | |||||
| 8 | Navig8 Excelsior | 74,000 | STX | Q1 2016 | Delivered | |||||
| 9 | Navig8 Expedite | 74,000 | STX | Q1 2016 | Delivered | |||||
| Newbuildings | ||||||||||
| 1 | Navig8 Symphony | 110,000 | Sungdong | Q1 2016 | On order | |||||
| 2 | Navig8 Sanctity | 110,000 | Sungdong | Q1 2016 | On order | |||||
| 3 | Navig8 Steadfast | 110,000 | Sungdong | Q2 2016 | On order | |||||
| 4 | Navig8 Supreme | 110,000 | Sungdong | Q3 2016 | On order | |||||
| 5 | Navig8 Grace | 113,000 | GSI | Q2 2016 | On order | |||||
| 6 | Navig8 Gallantry | 113,000 | GSI | Q2 2016 | On order | |||||
| 7 | Navig8 Guard | 113,000 | GSI | Q2 2016 | On order | |||||
| 8 | Navig8 Guide | 113,000 | GSI | Q3 2016 | On order | |||||
| 9 | Navig8 Goal | 113,000 | GSI | Q3 2016 | On order | |||||
| 10 | Navig8 Gauntlet | 113,000 | GSI | Q4 2016 | On order | |||||
| 11 | Navig8 Gladiator | 113,000 | GSI | Q4 2016 | On order | |||||
| 12 | Navig8 Gratitude | 113,000 | GSI | Q4 2016 | On order | |||||
| 13 | Navig8 Exceed | 74,000 | STX | Q1 2016 | On order | |||||
| 14 | Navig8 Experience | 74,000 | STX | Q1 2016 | On order | |||||
| 15 | Navig8 Executive | 74,000 | STX | Q2 2016 | On order | |||||
| 16 | Navig8 Express | 74,000 | STX | Q2 2016 | On order | |||||
| 17 | Navig8 Excellence | 74,000 | STX | Q2 2016 | On order | |||||
| 18 | Navig8 Pride | 74,000 | SPP | Q3 2016 | On order | |||||
| 19 | Navig8 Providence | 74,000 | SPP | Q3 2016 | On order | |||||
| 20 | Navig8 Precision | 74,000 | SPP | Q4 2016 | On order | |||||
| 21 | Navig8 Prestige | 74,000 | SPP | Q4 2016 | 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 Product 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 Product 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 described from time to time in the reports filed by the Company with the United States Securities and Exchange Commission.
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
navig8products@rosecoglobal.com