Amount of profit
share revenues
Quarter recorded per quarter
-----------------
1st Quarter 2007 $ 1.1 million
2nd Quarter 2007 $ 1.0 million
3rd Quarter 2007 $ 1.3 million
4th Quarter 2007 $ 0.6 million
1st Quarter 2008 $ 1.2 million
2nd Quarter 2008 $ 1.6 million
3rd Quarter 2008 $ 1.8 million
4th Quarter 2008 $ 2.2 million
1st Quarter 2009 $ 1.7 million
2nd Quarter 2009 $ 0.7 million
3rd Quarter 2009 $ 0.8 million
Total $ 14.0 million
Operating expenses for our MR product tankers averaged $5,356 per day per
vessel in the third quarter of 2009, versus $4,972 per day per vessel in
the third quarter of 2008. Our Panamax product tankers averaged operating
expenses of $6,298 per day per vessel in the third quarter of 2009, versus
$5,577 per day per vessel in the third quarter of 2008. The increase of
the daily operating expenses of the vessels relates primarily to increased
crew wages, the timing of crew traveling expenses and some repairs to the
anchor system of the Omega Lady Miriam as well as repair to the piping
system of the Omega Lady Sarah.
First Nine Months 2009 Results
For the nine months ended September 30, 2009, Omega Navigation reported
total revenues of $ 49.7 million and Net Income of $ 11.6 million, or $
0.74 per basic share excluding a loss on interest rate derivative
instruments, a gain on warrants revaluation, non cash incentive
compensation grants and a loss related to the termination of a purchase
agreement. Including these items, Net income was $4.8 million or $0.31 per
share. Adjusted EBITDA for the first nine months of 2009 was $ 27.8
million. Please see below for a reconciliation of Adjusted EBITDA to Cash
from Operating Activities.
Operating Income included revenue of $ 3.2 million attributable to profit
sharing.
The Company owned and operated an average of eight product carriers during
the first nine months of 2009, the same as in the first nine months of
2008. In addition since April 2009, the Company has held a 50% interest in
a joint venture which owns an additional product carrier. Excluding profit
sharing, the Company's Panamax product carriers earned an average
time-charter equivalent rate of $ 22,501 per day per vessel during the
first nine months of 2009, versus $ 25,054 per day per vessel (net of
voyage expenses), during the first nine months of 2008. The Company's
Handymax product tankers earned an average time charter equivalent rate of
$ 17,222 per vessel per day during the first nine months of 2009 versus $
20,763 per day per vessel (net of voyage expenses) during the first nine
months of 2008.
Operating expenses for the MR product tankers averaged $ 5,317 per day per
vessel in the first nine months of 2009 versus $ 4,880 per day per vessel
in the first nine months of 2008. Panamax product tankers averaged
operating expenses of $ 6,072 per day per vessel in the first nine months
of 2009 versus $ 5,353 per day per vessel in the first nine months of 2008.
The increase in operating expenses was primarily related to maintenance
expenses incurred during scheduled drydockings in the first half of 2009,
insurance deductible incurred related to a minor collision on the Omega
Theodore, an increase in crew wages, the timing of crew travel and some
other maintenance and repair expenses during the third quarter of 2009.
Recent Fleet Developments
With the announcement in the second quarter of 2009 of the delivery of the
newbuilding vessel Omega Duke to a joint venture in which Omega Navigation
has a 50% shareholding, Omega's current operating fleet includes nine
double hull product tankers with an aggregate carrying capacity of 559,358
dwt. The Omega Duke has been time chartered to ST Shipping (Glencore
International AG) for a period of five years until mid 2014, with a base
rate that fully covers operating expenses and debt service and has a profit
sharing arrangement. With the additional announcements that the Omega
Queen and the Omega King, have been time chartered out, seven of the nine
product tankers are currently employed under fixed rate time charters, The
other two vessels results are derived by the actual operating earnings of a
pool of similar vessels which currently trade on the spot market. The
recent time charters are to established counterparties, ST Shipping and
Torm A/S. Currently seven of Omega's nine vessels have profit-sharing
arrangements associated with them which enable the Company to share in the
charter market's upside potential.
With these recent charters concluded, the Company has for the remainder of
2009 and until mid 2010 fixed rate time charter coverage of 79%, inclusive
of the joint venture, all with profit-sharing arrangements allowing the
Company to take advantage of any upside in the charter market. The Company
has entered the Omega Prince and Omega Princess into floating rate time
charters with rates based on the market results of a pool of similar
vessels commercially managed by ST Shipping and through these arrangements
enjoy high utilization rates and above spot market charter rates. All of
the time charters recently concluded are for relatively short periods of
time which increases the Company's flexibility to terminate those on short
notice in case the market improves and thereby take advantage of improved
market conditions. Also, with these time charters we have continued full
utilization of the fleet without experiencing any unscheduled off hire
time.
While the global economy improved in the third quarter of 2009, the entire
tanker market has remained under extreme pressure and has had a severe
impact on rates and asset values. Omega's strategy of owning young, high
quality assets and employing its vessels primarily through term time
charters has enabled the Company to present profitable operating results,
even in these uncertain times and depressed tanker market. While oil
demand has contracted and oil product inventories remain high, we have seen
the overall economic climate recovering. As the economic recovery
progresses, we would expect to see an increase in oil demand and the
resultant increase in rates and asset values.
Management Commentary:
George Kassiotis, President and Chief Executive Officer of Omega
Navigation, commented: "We are pleased to have concluded our fourteenth
consecutive quarter with profitable operating results, since our IPO in
April 2006. We attribute our profitable operating results to our strategy
of acquiring high quality modern vessels and seeking predictable and stable
cash flows through the term employment of our vessels. In addition, the
fact that the charters on seven of our nine product tankers have profit
sharing has enabled us to participate in any upside of the charter market
and thereby maximize our profitability.
"We continue to return profitable operating results even in this most
challenging economic environment. We have seen signs that the economic
environment is improving and with that expect that demand for oil and oil
products should gradually return as well. We would expect that once demand
improves and current high inventory levels decrease, we should see an
improving rate environment and asset values should also improve. Based on
our current charter rates and the continued performance of each of our
charterers, we believe that we are well positioned to continue to show
profitable operating results even in this economic climate. While rates
remain somewhat depressed, we believe we are now seeing some signs of a
rebound in demand for oil products which should help stimulate rates going
forward.
"We seek to optimize the management of our capital exposure, de-lever our
balance sheet and create synergies which will enhance our ability to fund
our growth plans and take advantage of opportunities during challenging
times.
"In this respect, we are pleased to enjoy a strong business relationship
with Glencore, one of the largest commodities traders in the world. The
joint ownership of the Omega Duke is further evidence of the high standards
of operating performance that our Company offers to its customers and end
users of its vessels and also demonstrates our ability to create synergies
in a challenging environment.
"We also believe that we continue to have strong relationships with our
commercial lenders, which are comprised of large European and Asian banks
which have continued to offer their support to the Company.
"We would like to reiterate that we are continuing to pursue a strategy of
prudent growth, gradually expanding our fleet and our revenue and profit
generation potential.
"We remain optimistic about the long term fundamentals of the product
tanker market, the area of our strategic focus. We believe that we enjoy
strong competitive advantages in this market with our focused business
strategy, our fleet of young high quality vessels, term employment with
established charterers, a solid and flexible capital structure and a strong
management team, enabling us to continue delivering strong, stable and
predictable results for our shareholders."
Gregory McGrath, Chief Financial Officer of Omega Navigation, commented,
"As of September 30, 2009, the Company had a ratio of net debt to net
capitalization of about 64%, which we believe is modest for industry
standards given our strong time charter coverage and the young age and
quality of our fleet.
"We continue to have a strong relationship with our commercial lenders and
have received their ongoing support and commitment to the Company, even in
this very challenging credit market. Our balance sheet was also recently
strengthened by the formation of the joint venture company which owns the
Omega Duke and the consequent novation of the debt associated with that
vessel from Omega to the joint venture."
Fleet Data
Panamax Tankers Handymax Tankers
Three months ended Three months ended
-------------------------- --------------------------
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
------------ ------------ ------------ ------------
Number of vessels
at end of period 6 6 2 2
Average age of
fleet (in years) 4 3 3 2
Ownership days(1) 552 552 184 184
Available days(2) 552 543.19 184 184
Operating days(3) 552 543.19 184 184
Fleet Utilization(4) 100% 100% 100% 100%
Voyage revenues
(net of voyage
expenses)(7) $ 11,160,988 $ 13,598,722 $ 2,195,984 $ 3,824,960
Time charter
equivalent (TCE)
rate $/day(5)(7) 20,219 25,035 11,935 20,788
Vessel operating
expenses $ 3,476,371 $ 3,078,328 $ 985,531 $ 914,902
Daily vessel
operating
expenses $/day(6) 6,298 5,577 5,356 4,972
------------ ------------ ------------ ------------
Nine months ended Nine months ended
-------------------------- --------------------------
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
------------ ------------ ------------ ------------
Number of vessels
at end of period 6 6 2 2
Average age of
fleet (in years) 4 3 3 2
Ownership days(1) 1,638 1,644 546 548
Available days(2) 1,605.80 1,635.19 546 548
Operating days(3) 1,590.41 1,635.19 545.23 548
Fleet Utilization(4) 99% 100% 100% 100%
Voyage revenues
(net of voyage
expenses)(7) $ 36,132,408 $ 40,967,355 $ 9,403,458 $ 11,378,182
Time charter
equivalent (TCE)
rate $/day(5)(7) 22,501 25,054 17,222 20,763
Vessel operating
expenses 9,946,471 $ 8,799,990 $ 2,903,324 $ 2,674,263
Daily vessel
operating
expenses $/day(6) 6,072 5,353 5,317 4,880
------------ ------------ ------------ ------------
(1) Ownership days are the aggregate number of days in a period during
which each vessel in our fleet has been owned by us. Ownership days are an
indicator of the size of our fleet over a period and affect both the amount
of revenues and the amount of expenses that we record during a period.
(2) Available days are the number of our ownership days less the aggregate
number of days that our vessels are off-hire due to scheduled repairs or
repairs under guarantee, vessel upgrades or special surveys. The shipping
industry uses available days to measure the number of days in a period
during which vessels should be capable of generating revenues.
(3) Operating days are the number of available days in a period less the
aggregate number of days that our vessels are off-hire due to unforeseen
circumstances. The shipping industry uses operating days to measure the
aggregate number of days in a period during which vessels actually generate
revenues.
(4) We calculate fleet utilization by dividing the number of our operating
days during a period by the number of our available days during the period.
The shipping industry uses fleet utilization to measure a company's
efficiency in finding suitable employment for its vessels and minimizing
the number of days that its vessels are off-hire for reasons other than
scheduled repairs or repairs under guarantee, vessel upgrades, special
surveys or vessel positioning.
(5) Time charter equivalent, or TCE, is a measure of the average daily
revenue performance of a vessel on a per voyage basis. Our method of
calculating TCE is consistent with industry standards and is determined by
dividing voyage revenues (net of voyage expenses) by available days for the
relevant time period. Voyage expenses primarily consist of port, canal and
fuel costs that are unique to a particular voyage, which would otherwise be
paid by the charterer under a time charter contract, as well as
commissions. TCE is a standard shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company's
performance despite changes in the mix of charter types (i.e., spot
charters, time charters and bareboat charters) under which the vessels may
be employed between the periods.
(6) Daily vessel operating expenses, which include crew wages and related
costs, the cost of insurance, expenses relating to repairs and maintenance
(excluding drydocking), the costs of spares and consumable stores, tonnage
taxes and other miscellaneous expenses, but excludes any pre-delivery
expenses incurred at or prior to the delivery of the product tankers, are
calculated by dividing vessel operating expenses by ownership days for the
relevant period.
(7) For the three months ended September 30, 2009, excludes $ 0.8 million
of profit sharing revenue booked in the third quarter of 2009 related to
profit sharing on charters of the vessels Omega Lady Sarah, Omega Lady
Miriam, Omega Emmanuel and Omega Theodore. For the nine months ended
September 30, 2009 excludes $ 3.2 million of profit sharing revenue booked
in the first nine months of 2009 related to profit sharing on charters of
the vessels Omega Lady Sarah, Omega Lady Miriam, Omega Emmanuel and Omega
Theodore.
Omega Navigation Enterprises Inc
Consolidated Statements of Income
(All amounts expressed in thousands of U.S. Dollars)
Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
--------- --------- --------- ---------
(unaudited) (unaudited)
CONTINUING OPERATIONS
Revenues:
Voyage revenue 14,322 19,495 49,710 57,647
Expenses:
Voyage expenses 198 262 967 740
Vessel operating expenses 4,462 3,993 12,850 11,474
Depreciation and amortization 4,847 4,749 14,323 14,092
Management fees 318 312 969 933
General and administrative
expenses (including non cash
compensation expense of $262,
and $ 208 for the quarter
ended September 30, 2009 and
2008 respectively and $ 1,170
and $ 1,151 for the nine
months ended September 30,
2009 and 2008 respectively) 1,391 1,346 4,724 4,795
Foreign currency
(gains)/losses 15 (87) 94 (12)
--------- --------- --------- ---------
Income from vessels operation 3,091 8,920 15,783 25,625
--------- --------- --------- ---------
Loss on Termination of
purchase agreements - (3,000) -
Income/(Loss) from Joint
Venture companies 83 - (396) -
--------- --------- --------- ---------
Operating Income/(Expense) 3,174 8,920 12,387 25,625
--------- --------- --------- ---------
Other income (expenses)
Interest and finance costs (1,702) (3,146) (5,618) (10,339)
Interest income 22 205 103 466
Change in fair value of
warrants - 1,105 1,127 369
Gain/(Loss) on derivative
instruments (1,369) (1,904) (3,177) (740)
--------- --------- --------- ---------
Total other income
/(expenses), net (3,049) (3,740) (7,565) (10,244)
--------- --------- --------- ---------
INCOME/(LOSS) FROM CONTINUING
OPERATIONS 125 5,180 4,822 15,381
DISCONTINUED OPERATIONS
Income from discontinued
operations of the bulk carrier
fleet - - - 20
--------- --------- --------- ---------
INCOME FROM DISCONTINUED
OPERATIONS - - - 20
--------- --------- --------- ---------
Net income 125 5,180 4,822 15,401
========= ========= ========= =========
Omega Navigation Enterprises Inc
Consolidated Balance Sheets
(All amounts expressed in thousands of U.S. Dollars)
September 30, December 31,
2009 2008
(unaudited)
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 22,356 16,811
Accounts receivable, trade 446 596
Inventories 660 602
Prepayments and other 1,510 506
Restricted cash 308 123
------------ ------------
Total current assets 25,280 18,638
------------ ------------
FIXED ASSETS:
Vessels, net 428,468 442,485
Property and equipment, net 163 64
Advances for vessels' under construction and
acquisition 52,615 57,672
------------ ------------
Total fixed assets 481,246 500,221
------------ ------------
OTHER NON CURRENT ASSETS:
Deferred charges 2,279 1,154
Restricted cash 5,105 5,174
Investments in Joint Venture companies 5,229 -
Other non current assets - 109
------------ ------------
Total other non current assets 12,613 6,437
------------ ------------
------------ ------------
Total assets 519,139 525,296
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt 2,953 138
Accounts payable 2,420 1,804
Accrued and other current liabilities 3,654 1,815
Deferred revenue 3,665 1,368
Warrants - 3,941
Derivative liability 8,500 5,839
Dividends payable 166 87
Due to related parties 7 -
------------ ------------
Total current liabilities 21,365 14,992
------------ ------------
NON-CURRENT LIABILITIES:
Long term debt, net of current portion 328,136 335,112
Derivative liability 2,874 8,409
Dividends payable 105 174
Other long term liabilities 1 5
------------ ------------
Total non-current liabilities 331,116 343,700
------------ ------------
------------ ------------
COMMITMENTS AND CONTINGENCIES: - -
------------ ------------
Stockholders' equity:
Common stock 158 151
Additional paid-in capital 201,382 198,402
Accumulated deficit (34,882) (31,949)
------------ ------------
Total stockholders' equity 166,658 166,604
------------ ------------
------------ ------------
Total liabilities and stockholders' equity 519,139 525,296
============ ============
Omega Navigation Enterprises Inc
Consolidated Statements of Cash Flows
(All amounts expressed in thousands of U.S. Dollars)
Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
(unaudited) (unaudited)
--------- --------- --------- ---------
Cash flows from operating
activities
Net income from continuing
operations 125 5,180 4,822 15,381
Net cash provided by
continuing operating
activities 6,807 10,441 19,391 29,490
--------- --------- --------- ---------
Net cash provided by
continuing and discontinued
operating activities 6,807 10,441 19,391 29,490
--------- --------- --------- ---------
Cash flows used in investing
activities
Net cash used in investing
activities-continuing
operations (288) (340) (335) (12,341)
--------- --------- --------- ---------
Net cash used in investing
activities-continuing and
discontinued operations (288) (340) (335) (12,341)
--------- --------- --------- ---------
Cash flows (used in)/provided
by financing activities
Net cash (used in)/provided by
financing activities-continuing
operations 33 (7,486) (13,511) (12,200)
--------- --------- --------- ---------
Net cash (used in)/provided by
financing activities-continuing
and discontinued operations 33 (7,486) (13,511) (12,200)
--------- --------- --------- ---------
Net increase in cash and cash
equivalents 6,552 2,615 5,545 4,949
Cash and cash equivalents at
the beginning of the period 15,804 11,227 16,811 8,893
--------- --------- --------- ---------
Cash and cash equivalents at
end of period 22,356 13,842 22,356 13,842
========= ========= ========= =========
Reconciliation of Adjusted EBITDA (1) to Cash from Operating Activities
(All amounts expressed in thousands of U.S. Dollars)
CONTINUING & DISCONTINUED
OPERATIONS Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
(unaudited) (unaudited)
--------- --------- --------- ---------
Net cash from operating
activities 6,807 10,441 19,391 29,490
Net increase/(decrease) in
current assets and non
current assets (2,571) (239) 796 (92)
Net (increase)/decrease in
current liabilities excluding
bank debt 126 (329) (4,760) 851
Net interest expense 4,077 3,628 11,566 10,618
Warrants settled liability - 1,105 1,127 369
Stock based compensation
expense (262) (208) (1,170) (1,151)
Payments for drydocking costs (7) 528 1,521 528
Amortization of financing
costs (149) (152) (633) (507)
--------- --------- --------- ---------
Adjusted EBITDA 8,021 14,774 27,838 40,106
========= ========= ========= =========
(1) Adjusted EBITDA represents net income before interest, taxes,
gains/losses on derivative instruments, depreciation and amortization.
Adjusted EBITDA does not represent and should not be considered as an
alternative to net income or cash flow from operations, as determined by US
GAAP and our calculation of adjusted EBITDA may not be comparable to that
reported by other companies. Adjusted EBITDA is included here because it is
a basis upon which we assess our liquidity position because we believe it
presents useful information to investors regarding our ability to service
and/or incur indebtedness.
About Omega Navigation Enterprises, Inc.
Omega Navigation Enterprises, Inc. is an international provider of global
marine transportation services.
The Company was incorporated in the Marshall Islands in February 2005. Its
principal executive offices are located in Piraeus, Greece and it also
maintains an office in the United States.
Omega Navigation's Class A common shares are traded on the NASDAQ National
Market under the symbol "ONAV" and are also listed on the Singapore
Exchange Securities Trading Limited under the symbol "ONAV 50".
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 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," "will," "may," "should," "expect" "pending"
and similar expressions 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, the Company's management's examination of
historical operating trends, data contained in the Company's records and
other data available from third parties. Although the Company believes 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 the Company's control,
the Company cannot assure you that the Company will achieve or accomplish
these expectations, beliefs or projections.
In addition to these important factors other important factors that, in the
Company's view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of world
economies and currencies, general market conditions, including fluctuations
in charter rates and vessel values, changes in demand for product tanker
and dry bulk shipping capacity, changes in the Company's operating
expenses, including bunker prices, drydocking and insurance costs, the
market for the Company's vessels, 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,
potential disruption of shipping routes due to accidents or political
events, vessels breakdowns and instances of off-hires and other factors.
Please see the Company's filings with the Securities and Exchange
Commission for a more complete discussion of these and other risks and
uncertainties.
Contact Information: Contacts: Company Contact: Gregory A. McGrath Chief Financial Officer Omega Navigation Enterprises, Inc. PO Box 272 Convent Station, NJ 07961 Tel. (551) 580-0532 E-mail: gmcgrath@omeganavigation.com www.omeganavigation.com Investor Relations / Financial Media: Nicolas Bornozis President Capital Link, Inc. 230 Park Avenue, Suite 1536 New York, NY 10169 Tel. (212) 661-7566 E-mail: nbornozis@capitallink.com www.capitallink.com