Navig8 Chemical Tankers Inc. Reports Results for the Three and Six Months Ended June 30, 2016

LONDON, Aug. 3, 2016 /PRNewswire/ -- 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 six months ended June 30, 2016.

Highlights

• Generated revenue of $39.9 million and net income of $9.6 million, or $0.25 per share, for the three months ended June 30, 2016.
• Continued growth of the Company's operating fleet with the delivery of Navig8 Turquoise, a 49,000 DWT IMO2 Interline-coated chemical tanker and Navig8 Sirius, a 25,000 DWT stainless steel chemical tanker, in the second quarter of 2016 and Navig8 Topaz, a 49,000 DWT IMO2 Interline-coated chemical tanker in July 2016.
• Secured $286.2 million to finance the Company's newbuilding program.
• 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.

"The chemical tanker market softened in the second quarter, driven by typical seasonality that was exacerbated by a weak CPP environment," said Nicolas Busch, Chief Executive Officer of Navig8 Chemical Tankers Inc. "We are nonetheless pleased with our operating results as well as the significant progress we made towards completing the financing of our newbuilding fleet. The latter is notable given the current scarcity of financing available to ship owners and reflects well upon on our business. There has been a virtual halt in new ordering of chemical tankers, and the capacity of the global fleet is forecast to rise by only 2.5% over the next 12 months. Against the backdrop of expanding chemical export capacity coming onstream in the U.S. and Middle East during the same time period, we expect underlying demand to outpace the supply of suitable tonnage and a favorable chemical tanker rate environment."

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, 23 of these vessels have been delivered and are in operation. The remaining 14 vessels are scheduled to be fully delivered by September 2017, with five additional vessels 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. 

Nine IMO2 49,000 DWT Interline-coated medium range tankers ("T-Class vessels") built at STX Offshore & Shipbuilding Co., Ltd. ("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 two T-Class vessels, the Navig8 Turquoise in April 2016 and Navig8 Topaz in July 2016, and expects two T-Class vessels to be delivered between August and September 2016 and the remaining five by August 2017.  

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 took delivery of its first S-Class vessel, the Navig8 Sirius, in June 2016. The Company expects three additional S-Class vessels to be delivered by the end of 2016 and the remaining four by September 2017.

Financing Update

On April 7, 2016, the Company entered into sale and leaseback agreements with Bank of Communications Financial Leasing Co., Ltd ("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. 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 million 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.

On June 16, 2016, the Company entered into sale and leaseback agreements with CMB Financial Leasing Co. Ltd. ("CMB") for three A-Class vessels. A portion of the net proceeds of $91.2 million will be utilized to repay existing loans used to finance the vessels' newbuilding contracts under the multi-bank loan facility announced on February 3, 2015. Under the sale and leaseback agreements, the vessels will be sold and delivered to CMB. The Company has entered 7-year bareboat charters with CMB for the vessels. The Company has purchase options to re-acquire the vessels during the charter period, with the first such option exercisable on the third anniversary of each vessel's delivery and obligations to repurchase the vessels at the end of the bareboat period.

On June 22, 2016, the Company announced a $55.0 million secured loan facility to finance the first two S-Class vessels. The loan was provided by Credit Suisse AG and covers approximately 65% of the contract price of the vessels.

Results for the three months ended June 30, 2016

For the three months ended June 30, 2016, the Company reported net income of $9.6 million, or $0.25 per share, an increase of $6.8 million from a net income of $2.9 million for the three months ended June 30, 2015.  The increase in net income is mainly attributable to the larger size of the Company's fleet in the period ending June 30, 2016 as the Company continues to take delivery of its newbuilding program.

Revenue for the three months ended June 30, 2016 was $39.9 million, compared to revenue of $14.0 million for the three months ended June 30, 2015.  The total number of vessel operating days for the three months ended June 30, 2016 increased to 1,900.

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 June 30, 2016, were $21,822 per day and $19,979 per day, respectively.   The T-Class and the S-Class vessels (both delivered during the second quarter) generated $21,194 per day and $18,194 per day, respectively, during the same period. The Company had 22 vessels operating during the three months ended June 30, 2016, all of which operate in pools from which they derive TCE revenue.

Vessel operating expenses were $11.4 million for the three months ended June 30, 2016, an increase of $7.3 million from the three months ended June 30, 2015, when the Company had only taken delivery of 11 vessels compared to 22 vessels at the end of June 30, 2016.  Average fleet operating costs per day, including technical management fees, were approximately $5,500 per day for the three months ended June 30, 2016.

Depreciation expense for the three months ended June 30, 2016 was $7.7 million, an increase of $4.7 million compared to the three months ended June 30, 2015.  The Company begins to depreciate vessels in its newbuilding fleet as they are delivered. 

General and administrative expenses for the three months ended June 30, 2016, were $1.6 million, a decrease of $0.2 million from $1.8 million for the three months ended June 30, 2015. 

Interest expense for the three months ended June 30, 2016 was $9.6 million, an increase of $7.4 million from $2.2 million for the three months ended June 30, 2015 when the Company had only taken delivery of 11 of the vessels in its newbuilding program. 

Conference Call

On August 4, 2016 at 2:00PM GMT, the Company's management team will host a conference call to discuss its results for the three months ended June 30, 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 August 11, 2016 by dialing +1 412 317 0088 (Standard International Dial In) and using access code 10090156.

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 23 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 

1 Time charter equivalent, a non-US GAAP measure, is vessel revenues less voyage expenses (including bunkers and port charges but excluding pool commission).

 

 

 

 

 

 

 

 

 

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 world wide 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.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/navig8-chemical-tankers-inc-reports-results-for-the-three-and-six-months-ended-june-30-2016-300308615.html

SOURCE Navig8 Chemical Tankers Inc.