Form 6-K Performance Shipping For: Nov 30
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2021
Commission File Number: 001-35025
PERFORMANCE SHIPPING INC.
(Translation of registrant's name into English)
(Translation of registrant's name into English)
373 Syngrou Avenue, 175 64 Palaio Faliro, Athens, Greece
(Address of principal executive office)
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ].
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual
report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ].
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document
that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material
event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached to this Report on Form 6-K as Exhibit 99.1 is a press release dated November 9, 2021 of Performance Shipping Inc. (the “Company”) announcing the
Company's financial results for the third quarter and nine months ended September 30, 2021.
The information contained in this Report on Form 6-K, excluding the included quote by Mr. Andreas Michalopoulos, is hereby incorporated by reference into the Company's registration
statement on Form F-3 (File No. 333-197740), filed with the U.S. Securities and Exchange Commission (the "SEC") with an effective date of August 13, 2014, and the Company's registration statement on Form F-3 (File No. 333-237637), filed with the SEC
with an effective date of April 23, 2020.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PERFORMANCE SHIPPING INC.
(registrant)
Dated: November 9, 2021
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By:
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/s/ Andreas Michalopoulos
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Andreas Michalopoulos
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||
Chief Executive Officer
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Exhibit 99.1
Corporate Contact:
|
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Andreas Michalopoulos
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Chief Executive Officer, Director and Secretary
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Telephone: + 30-216-600-2400
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Email: [email protected]
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Website: www.pshipping.com
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Investor and Media Relations:
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Edward Nebb
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Comm-Counsellors, LLC
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Telephone: + 1-203-972-8350
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Email: [email protected]
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PERFORMANCE SHIPPING INC. REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2021
ATHENS, GREECE, November 9, 2021 – Performance Shipping Inc. (NASDAQ: PSHG) (the “Company”), a global shipping company specializing in the ownership of
tanker vessels, today reported a net loss from continuing and discontinued operations attributable to common stockholders of $2.2 million for the third quarter of 2021, compared to net income from continuing and discontinued operations attributable
to common stockholders of $0.4 million for the same period in 2020. Loss per share, basic and diluted, for the third quarter of 2021 was $0.43, while earnings per share, basic and diluted, for the third quarter of 2020 was $0.08.
Revenue from continuing and discontinued operations was $9.3 million ($4.3 million net of voyage expenses) for the third quarter of 2021, compared to $9.5
million ($6.7 million net of voyage expenses) for the same period in 2020. This decrease was mainly attributable to the decreased time-charter equivalent rates (TCE rates) achieved during the quarter as a result of depressed market conditions, and
was partially counterbalanced by the increase in ownership days, after the acquisition of the M/T P. Yanbu in December 2020. Fleetwide, the average time charter equivalent rate for the third quarter of 2021 was $9,335, compared with an average rate
of $15,990 for the same period in 2020. During the third quarter of 2021, net cash provided by operating activities of continuing and discontinued operations was $0.2 million, compared with net cash provided by operating activities of continuing
and discontinued operations of $2.3 million for the third quarter of 2020.
Net loss from continuing and discontinued operations for the nine months ended September 30, 2021, amounted to $7.7 million, compared to net income from
continuing and discontinued operations of $6.3 million for the nine months ended September 30, 2020. Net loss from continuing and discontinued operations attributable to common stockholders for the nine months ended September 30, 2021, amounted to
$7.7 million, and resulted in a loss per share, basic and diluted, of $1.52. Net income from continuing and discontinued operations attributable to common stockholders for the nine months ended September 30, 2020, amounted to $7.8 million, due to a
one-time gain of $1.5 million derived from the repurchase of the Series C preferred shares, and resulted in earnings per common share, basic and diluted, of $1.62 and $1.59, respectively.
As of September 30, 2021, the Company’s number of shares issued and outstanding was 5,082,726.
Commenting on the results of the third quarter of 2021, Mr. Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“Spot charter rates in the third quarter of 2021 remain depressed as a result of oil-producing countries maintaining their marginal increases in crude oil
and refined petroleum products production, despite the increased level of oil consumption and oil prices and the depletion of global inventories. So far, in the current quarter, we have seen an improvement in charter rates and demand for seaborne
oil transportation, and we believe that the tanker charter rate environment will continue to recover in the medium term. During the second quarter of 2021, we completed the special survey and installation of a ballast water treatment system on our
M/T Briolette. We will take advantage of the weak market to commence and complete similar work on our M/T P. Fos and our M/T Blue Moon during the fourth quarter. As a result of our financial results, and in accordance with our dividend policy, we
will not declare a dividend for our Q3 2021 results from operations.”
1
Tanker Market Update for the third quarter of 2021:
• Tanker fleet supply was 652.6 million dwt, up 0.1% from 652.1 million dwt from the previous quarter, and up 2.0% from Q3 2020 levels of 639.5 million dwt.
• Tanker demand in billion tonne-miles is projected to marginally increase by 1.2% in full year 2021, underpinned by seaborne oil trade volumes remaining
well below pre-Covid levels.
• Tanker fleet supply in deadweight terms is estimated to grow by a moderate 1.7% in 2021.
• Crude tanker fleet utilization was estimated at 80.0%, slightly up from 77.1% from the previous quarter and down from Q3 2020 levels of 83.0%.
• Newbuilding tanker contracting stood at 1.4 million dwt in the third quarter, the lowest quarterly total since the second quarter of 2009. This resulted
in the tanker orderbook remaining close to record low levels, representing 7.7% of the tanker fleet.
• Daily spot charter rates for Aframax tankers averaged $3,277, down 57.1% from the previous quarter average of $7,648 and down 62.3% from the Q3 2020
average of $8,698.
• The value of a 10-year-old Aframax tanker ended the third quarter at $26.0 million, at the same levels seen in the previous quarter, and it was up 13.0%
from the assessed value of $23.0 million seen in Q3 2020.
• The number of tankers occupied with floating storage (excluding dedicated storage) was 159 (24.6 million dwt), up 8.9% from 146 (22.3 million dwt) from
the previous quarter and down 50.6% from Q3 2020 levels of 322 (46.3 million dwt).
• Global oil consumption was 98.5 million bpd, up 1.9% from the previous quarter level of 96.7 million bpd, and up 5.4% from Q3 2020 levels of 93.5 million
bpd.
• Global oil production was 96.7 million bpd, up 2.0% from the previous quarter level of 94.8 million bpd and up 6.2% from Q3 2020 levels of 91.0 million
bpd.
• OECD commercial inventories were 2,786.0 million barrels, down 3.0% from the previous quarter level of 2,871.0 million barrels, and down 12.1% from Q3
2020 levels of 3,168.1 million barrels.
Novel Coronavirus Risks:
On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a pandemic. In response to the outbreak, many
countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines, travel restrictions, and other emergency public health measures in
an effort to contain the outbreak. Such measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets, which has reduced the global demand for oil and oil products, which the
Company’s vessels transport. Despite the global gradual recovery from COVID-19, the Company continues to take proactive measures to ensure the health and wellness of its crew and onshore employees while maintaining effective business continuity and
uninterrupted service to its customers. The overall impact of COVID-19 on the Company’s business, and the efficacy of any measures the Company takes in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak
further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.
2
Summary of Selected Financial & Other Data (Continuing and Discontinued Operations1 )
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||||||||||||||||
For the three months ended September 30,
|
For the nine months ended September 30,
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|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
(unaudited)
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(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
STATEMENT OF OPERATIONS DATA (in thousands of US Dollars):
|
||||||||||||||||
Revenue
|
$
|
9,331
|
$
|
9,543
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$
|
26,844
|
$
|
39,078
|
||||||||
Voyage expenses
|
5,037
|
2,843
|
15,053
|
11,311
|
||||||||||||
Vessel operating expenses
|
2,784
|
2,814
|
8,563
|
9,133
|
||||||||||||
Net income / (loss)
|
(2,156
|
)
|
389
|
(7,656
|
)
|
6,325
|
||||||||||
Net income / (loss) attributable to common stockholders
|
(2,156
|
)
|
389
|
(7,656
|
)
|
7,825
|
||||||||||
Earnings / (Loss) per common share, basic
|
(0.43
|
)
|
0.08
|
(1.52
|
)
|
1.62
|
||||||||||
Earnings / (Loss) per common share, diluted
|
(0.43
|
)
|
0.08
|
(1.52
|
)
|
1.59
|
||||||||||
FLEET DATA
|
||||||||||||||||
Average number of vessels
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5.0
|
4.6
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5.0
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4.8
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||||||||||||
Number of vessels
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5.0
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4.0
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5.0
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4.0
|
||||||||||||
Ownership days
|
460
|
419
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1,365
|
1,304
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||||||||||||
Available days
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460
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419
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1,324
|
1,304
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||||||||||||
Operating days (2)
|
416
|
393
|
1,121
|
1,194
|
||||||||||||
Fleet utilization
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90.4
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%
|
93.8
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%
|
84.7
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%
|
91.6
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%
|
||||||||
AVERAGE DAILY RESULTS
|
||||||||||||||||
Time charter equivalent (TCE) rate (3)
|
$
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9,335
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$
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15,990
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$
|
8,906
|
$
|
21,294
|
||||||||
Daily vessel operating expenses (4)
|
$
|
6,052
|
$
|
6,716
|
$
|
6,273
|
$
|
7,004
|
_________________
(1) |
Discontinued Operations refer to our container vessels segment that we disposed of in 2020.
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(2) |
Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire. The specific calculation counts as on-hire the days of the
ballast leg of the spot voyages, as long as a charter party is in place. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
|
(3) |
Time charter equivalent rates, or TCE rates, are defined as revenue (voyage, time charter and pool revenue), less voyage expenses during a period divided by the number of our available days
during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE is a non-GAAP measure. TCE rate is a standard shipping industry performance
measure used primarily to compare daily earnings generated by vessels despite changes in the mix of charter types (i.e., voyage (spot) charters, time charters and bareboat charters).
|
(4) |
Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the costs of spares and
consumable stores, lubricant costs, tonnage taxes, regulatory fees, environmental costs, lay-up expenses and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.
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3
Fleet Employment Profile (As of November 9, 2021)
|
|||||||||
Performance Shipping Inc.’s fleet is employed as follows:
|
|||||||||
Vessel
|
Built
|
Capacity
|
Builder
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Gross Rate (USD Per Day)
|
Com 1
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Charterers
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Delivery Date to Charterers
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Redelivery Date to Owners 2
|
|
Aframax Tanker Vessels
|
|||||||||
1
|
BLUE MOON
|
2011
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104,623 DWT
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Sumitomo Heavy Industries Marine & Engineering Co., LTD.
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$28,000
|
5.00%
|
Aramco Trading Company, Saudi Arabia
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19-Jun-20
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19-Nov-21 - 18-Jan-22
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2
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BRIOLETTE
|
2011
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104,588 DWT
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Sumitomo Heavy Industries Marine & Engineering Co., LTD.
|
Spot
|
-
|
-
|
-
|
- - -
|
3
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P. FOS
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2007
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115,577 DWT
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Sasebo Heavy Industries Co. Ltd
|
Spot
|
-
|
-
|
-
|
- - -
|
4
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P. KIKUMA
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2007
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115,915 DWT
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Samsung Heavy Industries Co Ltd.
|
Spot
|
-
|
-
|
-
|
- - -
|
5
|
P. YANBU
|
2011
|
105,391 DWT
|
Sumitomo Heavy Industries Marine & Engineering Co., LTD.
|
Pool
|
-
|
-
|
-
|
- - -
|
(1) Total commission paid to third parties.
|
(2) Range of redelivery dates, with the actual date of redelivery being at the Charterers’ option, but subject to the terms, conditions, and exceptions of the particular
charterparty.
|
About the Company
Performance Shipping Inc. is a global provider of shipping transportation services through its ownership of Aframax tankers. The Company's current fleet is
employed on spot voyages, time charters, and through pool arrangements.
Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor
protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals,
strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending," and similar expressions, terms or phrases may
identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or
projections.
In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in
the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand for our vessels,
changes in the supply of vessels, changes in worldwide oil production and consumption and storage, changes in our operating expenses, including bunker prices, crew costs, dry-docking and insurance costs, our future operating or financial results,
availability of financing and refinancing, 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, the
length and severity of epidemics and pandemics, including the ongoing outbreak of the novel coronavirus (COVID-19) and its impact on the demand for seaborne transportation of petroleum and other types of products, 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 or events, including “trade wars”, acts by terrorists or acts of piracy on
ocean-going vessels, potential disruption of shipping routes due to accidents, labor disputes or political events, vessel breakdowns and instances of off-hires and other important factors. Please see our filings with the U.S. Securities and
Exchange Commission for a more complete discussion of these and other risks and uncertainties.
(See financial tables attached)
4
PERFORMANCE SHIPPING INC.
FINANCIAL TABLES
Expressed in thousands of U.S. Dollars, except for share and per share data
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUING AND DISCONTINUED OPERATIONS)
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
REVENUE:
|
||||||||||||||||
Revenue
|
$
|
9,331
|
$
|
9,543
|
$
|
26,844
|
$
|
39,078
|
||||||||
EXPENSES:
|
||||||||||||||||
Voyage expenses
|
5,037
|
2,843
|
15,053
|
11,311
|
||||||||||||
Vessel operating expenses
|
2,784
|
2,814
|
8,563
|
9,133
|
||||||||||||
Depreciation and amortization of deferred charges
|
1,908
|
1,588
|
5,561
|
4,267
|
||||||||||||
Management fees
|
-
|
76
|
-
|
347
|
||||||||||||
General and administrative expenses
|
1,304
|
1,721
|
4,313
|
6,127
|
||||||||||||
Impairment losses
|
-
|
-
|
-
|
339
|
||||||||||||
Gain on vessels' sale
|
-
|
(345
|
)
|
-
|
(319
|
)
|
||||||||||
Provision for credit losses
|
5
|
21
|
(15
|
)
|
152
|
|||||||||||
Foreign currency losses
|
11
|
16
|
79
|
24
|
||||||||||||
Operating income / (loss)
|
$
|
(1,718
|
)
|
$
|
809
|
$
|
(6,710
|
)
|
$
|
7,697
|
||||||
OTHER INCOME / (EXPENSES):
|
||||||||||||||||
Interest and finance costs
|
(441
|
)
|
(433
|
)
|
(1,362
|
)
|
(1,470
|
)
|
||||||||
Interest income
|
3
|
13
|
16
|
98
|
||||||||||||
Other income
|
-
|
-
|
400
|
-
|
||||||||||||
Total other expenses, net
|
$
|
(438
|
)
|
$
|
(420
|
)
|
$
|
(946
|
)
|
$
|
(1,372
|
)
|
||||
Net income / (loss)
|
$
|
(2,156
|
)
|
$
|
389
|
$
|
(7,656
|
)
|
$
|
6,325
|
||||||
Gain from repurchase of preferred shares
|
-
|
-
|
-
|
1,500
|
||||||||||||
Net income / (loss) attributable to common stockholders
|
$
|
(2,156
|
)
|
$
|
389
|
(7,656
|
)
|
7,825
|
||||||||
Earnings / (Loss) per common share, basic
|
$
|
(0.43
|
)
|
$
|
0.08
|
$
|
(1.52
|
)
|
$
|
1.62
|
||||||
Earnings / (Loss) per common share, diluted
|
$
|
(0.43
|
)
|
$
|
0.08
|
$
|
(1.52
|
)
|
$
|
1.59
|
||||||
Weighted average number of common shares, basic
|
5,032,333
|
4,922,239
|
5,024,144
|
4,845,009
|
||||||||||||
Weighted average number of common shares, diluted
|
5,032,333
|
4,922,239
|
5,024,144
|
4,919,898
|
||||||||||||
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
|
|||||||||
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net income / (loss)
|
$
|
(2,156
|
)
|
$
|
389
|
$
|
(7,656
|
)
|
$
|
6,325
|
||||||
Comprehensive income/ (loss)
|
$
|
(2,156
|
)
|
$
|
389
|
$
|
(7,656
|
)
|
$
|
6,325
|
||||||
CONDENSED CONSOLIDATED BALANCE SHEET DATA
|
||||||||
(Expressed in thousands of US Dollars)
|
||||||||
September 30, 2021
|
December 31, 2020**
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Cash and cash equivalents
|
$
|
12,272
|
$
|
21,378
|
||||
Property held for sale
|
878
|
-
|
||||||
Vessels, net
|
123,796
|
128,108
|
||||||
Other fixed assets, net
|
178
|
1,135
|
||||||
Other assets
|
9,576
|
7,233
|
||||||
Total assets
|
$
|
146,700
|
$
|
157,854
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Long-term debt, net of unamortized deferred financing costs
|
$
|
51,842
|
$
|
57,666
|
||||
Other liabilities
|
5,470
|
3,391
|
||||||
Total stockholders' equity
|
89,388
|
96,797
|
||||||
Total liabilities and stockholders' equity
|
$
|
146,700
|
$
|
157,854
|
||||
* *The balance sheet data as of December 31, 2020 has been derived from the audited consolidated financial statements at that date.
|
OTHER FINANCIAL DATA (CONTINUING AND DISCONTINUED OPERATIONS)
|
||||||||||||||||
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net Cash provided by / (used in) Operating Activities
|
$
|
207
|
$
|
2,289
|
$
|
(1,333
|
)
|
$
|
12,295
|
|||||||
Net Cash provided by / (used in) Investing Activities
|
$
|
(969
|
)
|
$
|
5,298
|
$
|
(1,840
|
)
|
$
|
(17,911
|
)
|
|||||
Net Cash provided by / (used in) Financing Activities
|
$
|
(1,977
|
)
|
$
|
(2,453
|
)
|
$
|
(5,933
|
)
|
$
|
16,441
|
5
Dividend Policy – Quarterly Calculations
Our Board of Directors has adopted a variable quarterly dividend policy, pursuant to which we may declare and pay a variable quarterly cash dividend. If
declared, the quarterly dividend is expected to be paid each February, May, August and November and will be equal to available cash from operations during the previous quarter after cash payments for debt repayment and interest expense and
reserves for the replacement of our vessels, scheduled drydockings, intermediate and special surveys and other purposes as our Board of Directors may from time to time determine are required, after taking into account contingent liabilities, the
terms of any credit facility, our growth strategy and other cash needs as well as the requirements of Marshall Islands law. The declaration and payment of dividends is, at all times, subject to the discretion of our Board of Directors. Our Board of
Directors may review and amend our dividend policy from time to time, in light of our plans for future growth and other factors.
In accordance with our dividend policy, and taking into account the above-listed factors, we expect to pay dividends only if during the preceding quarter
Quarterly Cash Flow is positive and Quarter-End Excess Cash is also positive. As a general guideline, the amount of any such dividends is expected to be based on a pay-out ratio of the lower of i) Quarterly Cash Flow; and ii) Quarter-End Excess
Cash. So long as our end of quarter outstanding debt exceeds our equity market capitalization our pay-out ratio is expected to be 50%. We will consider increasing the pay-out ratio gradually up to a maximum level of 90% that we may achieve when our
end of quarter outstanding debt is less than 10% of our equity market capitalization. Quarter-End Excess Cash is defined as actual end of quarter Cash and Cash Equivalents over our Minimum Cash Threshold. Minimum Cash Threshold is defined as the
sum of minimum liquidity pursuant to our loan agreements and $1.5 million per vessel. Our bank facilities currently require us to maintain minimum liquidity of $9.0 million.
Quarterly Cash Flow is equal to voyage and time charter revenues less voyage expenses, less vessel operating expenses, less general and administrative expenses, less - the
greater of i) net interest expense and repayment of long-term bank debt or ii) fleet replacement reserves - and less maintenance reserves for our fleet.
We believe the above approach will ensure the sustainability of our Company and replacement of our fleet as during quarters where either Excess Cash is negative or Quarterly
Cash Flow is negative, we will not pay dividends until Quarterly Cash Flow is positive and Excess Cash is also positive. Below are our calculations of Quarter-End Excess Cash and Quarterly Cash Flow for the third quarter of 2021.
DIVIDEND CALCULATIONS
|
||||
(Expressed in thousands of U.S. Dollars)
|
||||
For the three months ended September 30, 2021
|
||||
Revenue
|
$
|
9,331
|
||
Less, Voyage expenses
|
$
|
(5,037
|
)
|
|
Less, Vessel operating expenses
|
$
|
(2,784
|
)
|
|
Less, General and administrative expenses
|
$
|
(1,284
|
)
|
|
Less, Greater of (I) or (II):
|
||||
Interest and finance costs
|
$
|
(441
|
)
|
|
Plus, Repayment of long-term bank debt
|
$
|
(1,977
|
)
|
|
Total (I)
|
$
|
(2,418
|
)
|
|
Or
|
||||
Replacement reserve (II)
|
$
|
(1,714
|
)
|
|
Less, Maintenance reserve
|
(438
|
)
|
||
Quarterly Cash Flow (A)
|
$
|
(2,630
|
)
|
|
Cash and cash equivalents
|
$
|
12,272
|
||
Less, Minimum Cash Threshold
|
$
|
16,500
|
||
Quarter-End Excess Cash (B)
|
$
|
(4,228
|
)
|
|
Quarterly Cash Flow Test (A) >0, AND
|
Not eligible for dividend
|
|||
Quarter-End Excess Cash Test (B) >0
|
Not eligible for dividend
|
|||
Cash Available for Dividend, lower (A) or (B)
|
$
|
-
|
||
Payout ratio
|
50
|
%
|
||
Quarterly Dividend
|
$
|
-
|
||
_________________
(1) |
General and administrative expenses, for the purpose of calculating dividends, exclude non-cash items.
|
(2) |
Replacement reserves reflect the aggregate annual amount of cash that the Company retains to fund the replacement of each of its vessels. In addition to the replacement reserve retained and
reinvested at a certain annual rate or equivalent debt repayment, the Company estimates at the specific expected replacement date to utilize funds from the proceeds of the scrap value of the vessels and the assumption of a modest level of
debt to purchase the replacement vessel assuming such replacement is for a ten-year-old vessel at the ten-year historical mid-cycle value.
|
(3) |
Maintenance reserves are based on an estimated cost for the drydock, intermediate and special surveys of the vessels in our fleet over the recurring statutory five-year survey period. They
are used, instead of actual maintenance costs when incurred, for purposes of calculating the quarterly dividend to remove the additional cash flow variability during quarters that drydocks occur.
|
6
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