Navios Maritime Acquisition announced its best set of quarterly results since merging with spin-off Navios Midstream Partners and said its focus going forward is on refinancing its debt.
New York-listed Navios Acquisition, itself a tanker spin-off of Angeliki Frangou-led Navios Maritime Holdings, reported adjusted net income of $32.4m, up from a loss of $18.6m in the same period last year.
Bottom-line net income came in at $31m, reversing a loss of $16.6m in the second quarter of 2019. For the first half, Navios Acquisition reported a bottom-line profit of $61.9m, up from $15.7m in the same period of 2019.
Operating Ebitda income soared by 72% from a year ago to $72.6m, the company’s best performance since at least eight years, according to available records.
In line with booming tanker markets over much of the second quarter, Navios Acquisition's average daily time-charter equivalent (TCE) jumped to more than $28,800 in the second quarter, its highest reading since at least the end of 2012.
“Our chartering strategy focuses on capturing upside and we earned $20.7m in profit-sharing in the second quarter of 2020,” said Frangou, who is the company’s chief executive, in a news release.
The results include an $8.9m cash injection from Navios Europe II, a private Navios group special vehicle that was dissolved in the second quarter. The cash injection apart, Navios Acquisition also received seven containerships as part of the Navios Europe liquidation.
But Navios Acquisition clarified it is holding these vessels, which do not belong to its core business, for sale.
Navios Acquisition maintained a quarterly dividend payment of 30 cents per share. The company has been paying dividends uninterruptedly since 2010. Its payout stays at the current level since the fourth quarter of 2018, when Navios Acquisition took over Navios Midstream Partners, an affiliated master limited partnership (MLP).
Focus on refinancing
The company's top concern going forward is to roll over debt, Frangou told analysts in a conference after its second-quarter results were published.
"That is something that we're doing over the last two years... it’s a priority for us,” Frangou said. The company has about $650m of senior secured ship mortgage notes falling due in November 2021. It issued them back in 2013 at a fixed rate of 8.125%.
Navios Acquisition has already undertaken steps to smoothen its debt load. In the second quarter alone it concluded $92.9m worth of refinancing deals for six product tankers, pushing back related debt maturities to 2027.
Navios Acquisition’s active fleet currently consists of 43 tankers, including ten VLCCs, 31 product tankers and two chemical carriers.
The fleet is set to grow by four bareboat chartered-in VLCC newbuildings, which are currently built in Japan and are expected to be delivered between the end of this year and mid-2022. The company formally confirmed on Thursday that it would receive the fourth of these vessels, for which it declared an option in June.
Current market conditions make Navios's VLCC newbuildings look like a very good deal. In its results presentation, the company estimated the net present value of the differential between the quartet's bareboat-in and charter-out rates at a whopping $64.7m in total.
