- Quarterly Cash Distribution of $0.4225 per unit; $1.69 per unit annualized
- Commercial and technical management fees fixed until December 2018 at current rate
- Purchase options extended for three VLCCs
- Net Income: $5.5 million in Q3; $18.8 million for the nine months
- EBITDA: $15.7 million in Q3; $49.8 million for the nine months
- Operating Surplus: $9.3 million in Q3; $30.6 million for the nine months
MONACO, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Navios Maritime Midstream Partners L.P. (“Navios Midstream”) (NYSE:NAP), an owner and operator of tanker vessels, reported its financial results today for the third quarter and the nine month period ended September 30, 2016.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Midstream stated: “We are pleased with our third quarter results, for which we recorded $15.7 million of EBITDA and $5.5 million of net income. We recently announced a distribution of $0.4225 per unit, representing an annual distribution of $1.69 and a current yield of approximately 15% per unit. Our unit coverage ratio was 1.06x for the quarter.”
Angeliki Frangou continued, “Navios Midstream extended the fixed fee under the management agreement until December 2018 with no increase. Operating expenses for commercial and technical management of the vessels thus remain at $9,500 per day, about 8% below the industry average. Navios Midstream also extended, for a two-year period, purchase options for three of the five vessels, all of which were scheduled to expire in November of 2016. The commercial terms of the options will remain the same and Navios Maritime Acquisition Corporation will not be providing any charter rate backstop. We anticipate that these options will provide a continued avenue for fleet and distribution growth.”
RECENT DEVELOPMENTS
Extension of fixed fee period under the Management Agreement
In October 2016, Navios Midstream amended its existing management agreement (the “Management Agreement”) with Navios Tankers Management Inc., a wholly-owned subsidiary of Navios Maritime Holdings Inc., to extend the fixed fee period for commercial and technical management services of its fleet, until December 31, 2018 at the current rate of $9,500 per day per VLCC, following the expiration of the current fixed fee period. Dry docking expenses are reimbursed at cost for all vessels.
Purchase option extended for three VLCCs
Navios Midstream holds options to acquire up to five VLCCs from Navios Maritime Acquisition Corporation (“Navios Acquisition”) expiring on November 18, 2016. In October 2016, Navios Acquisition extended the options of the Nave Buena Suerte, the Nave Neutrino and the Nave Electron for an additional two-year period expiring on November 18, 2018. The purchase price will be equal to the fair market value of each of the three vessels at the time of the options’ exercise. The extended purchase options do not include any backstop commitments from Navios Acquisition.
Cash Distribution
The Board of Directors of Navios Midstream declared a cash distribution for the third quarter of 2016 of $0.4225 per unit. The cash distribution is payable on November 10, 2016 to unitholders of record as of November 8, 2016.
Long – Term Cash Flow and Profit Sharing
Navios Midstream has entered into long-term charter-out agreements for its vessels, with a remaining average term of 4.6 years, which are expected to provide a stable base of revenue and distributable cash flow. Navios Midstream has currently contracted out 100% of its available days for each of 2016 and 2017 and 99.4% for 2018, including the backstop commitment provided by Navios Acquisition, expecting to generate revenues of approximately $94.5 million, $86.6 million and $86.2 million for 2016, 2017 and 2018, respectively. The average expected daily charter-out rate for the fleet is $43,036, $39,559 and $39,587 for 2016, 2017 and 2018, respectively.
During the three month period and the nine month period ended September 30, 2016, Navios Midstream recognized $0.6 million and $4.9 million, respectively, under its profit sharing arrangements.
Continuous Offering Program
On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement (the “Sales Agreement”) with S. Goldman Capital LLC, as sales agent (the “Agent”), pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25.0 million. As of September 30, 2016, Navios Midstream issued 277,103 common units and received net proceeds of $3.4 million after deducting fees and expenses of $0.2 million. In connection with the issuance of the common units, Navios Midstream issued 5,655 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were $0.1 million.
FINANCIAL HIGHLIGHTS
For the following results and the selected financial data presented herein, Navios Midstream has compiled condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015. The quarterly and nine month period 2016 and 2015 information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA and Operating Surplus are non-GAAP financial measures and should not be used in isolation or substitution for Navios Midstream’s results.
| (in $‘000 except per unit data) | Three Month Period ended September 30, 2016 (unaudited) | Three Month Period ended September 30, 2015 (unaudited) | Nine Month Period ended September 30, 2016 (unaudited) | Nine Month Period ended September 30, 2015 (unaudited) | ||||||||||||
| Revenue | $ | 22,209 | $ | 22,473 | $ | 69,053 | $ | 57,526 | ||||||||
| Net income | 5,457 | 6,232 | 18,841 | 17,938 | ||||||||||||
| EBITDA | 15,683 | 16,209 | 49,805 | 42,809 | ||||||||||||
| Earnings per common unit (basic and diluted) | 0.26 | 0.30 | 0.91 | 0.89 | ||||||||||||
| Operating Surplus | 9,331 | 9,737 | 30,602 | 29,460 | ||||||||||||
| Maintenance and replacement capital expenditure reserve | (3,581 | ) | (3,591 | ) | (10,741 | ) | (8,093 | ) | ||||||||
Three month periods ended September 30, 2016 and 2015
Revenue for the three month period ended September 30, 2016 decreased by $0.3 million to $22.2 million, as compared to $22.5 million for the same period in 2015. Time Charter Equivalent (“TCE”) was $40,835 for the three month period ended September 30, 2016 and $45,432 for the three month period ended September 30, 2015. The decrease in TCE was mainly due to the decrease by $1.5 million of profit sharing recognized in relation to certain charters for the three month period ended September 30, 2016, as compared to the same period of 2015.
EBITDA decreased by approximately $0.5 million to $15.7 million for the three month period ended September 30, 2016, as compared to $16.2 million for the same period in 2015. The decrease in EBITDA was due to a: (a) $0.3 million decrease in revenue; (b) $0.2 million increase in time charter expenses; and (c) $0.1 million increase in general and administrative expenses.
The reserve for estimated maintenance and replacement for capital expenditures for each of the three month periods ended September 30, 2016 and 2015 was $3.6 million (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).
Navios Midstream generated an Operating Surplus for the three month period ended September 30, 2016 of $9.3 million. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).
Net income for the three month period ended September 30, 2016 was $5.5 million compared to $6.2 million for the three month period ended September 30, 2015. The decrease in net income of approximately $0.8 million was due to a: (a) $0.5 million decrease in EBITDA; and (b) $0.4 million increase in direct vessel expenses; partially mitigated by a $0.1 million increase in interest income.
Earnings per common unit for the three month period ended September 30, 2016 were $0.26.
Nine month periods ended September 30, 2016 and 2015
Revenue for the nine month period ended September 30, 2016 increased by $11.5 million to $69.1 million, as compared to $57.5 million for the same period in 2015. The increase was due to the acquisition of the Nave Celeste and the C. Dream in June 2015 and an increase of $0.4 million in profit sharing recognized in relation to certain charters for the nine month period ended September 30, 2016, as compared to the same period of 2015. Time Charter Equivalent (“TCE”) was $43,295 for the nine month period ended September 30, 2016 and $45,917 for the nine month period ended September 30, 2015. The decrease in TCE was due to the lower average charter rate of the two VLCCs acquired in June 2015, compared to the existing fleet.
EBITDA increased by approximately $7.0 million to $49.8 million for the nine month period ended September 30, 2016, as compared to $42.8 million for the same period in 2015. The increase in EBITDA was mainly due to an $11.5 million increase in revenue. The above increase was partially mitigated by a: (a) $3.2 million increase in management fees; (b) $0.6 million increase in general and administrative expenses; (c) $0.5 million increase in time charter expenses; and (d) $0.1 million increase in other (expense)/ income, net.
The reserve for estimated maintenance and replacement capital expenditures for the nine month periods ended September 30, 2016 and 2015 was $10.7 million and $8.1 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).
Navios Midstream generated an Operating Surplus for the nine month period ended September 30, 2016 of $30.6 million. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).
Net income for the nine month period ended September 30, 2016 was $18.8 million compared to $17.9 million for the nine month period ended September 30, 2015. The increase of approximately $0.9 million in net income was due to a: (a) $7.0 million increase in EBITDA; and (b) $0.2 million increase in interest income; partially mitigated by a: (i) $2.8 million increase in depreciation and amortization; (ii) $2.0 million increase in interest expenses and finance cost; and (iii) $1.4 million increase in direct vessel expenses.
Earnings per common unit for the nine month period ended September 30, 2016 were $0.91.
Fleet Employment Profile
The following table reflects certain key indicators of Navios Midstream’s core fleet performance for the three and nine month periods ended September 30, 2016 and 2015.
| Three Month Period ended September 30, 2016 (unaudited) | Three Month Period ended September 30, 2015 (unaudited) | Nine Month Period ended September 30, 2016 (unaudited) | Nine Month Period ended September 30, 2015 (unaudited) | ||||||||||||
| FLEET DATA | |||||||||||||||
| Available days(1) | 534 | 489 | 1,568 | 1,239 | |||||||||||
| Operating days(2) | 531 | 488 | 1,562 | 1,238 | |||||||||||
| Fleet utilization(3) | 99.6 | % | 99.8 | % | 99.6 | % | 99.9 | % | |||||||
| Vessels operating at period end | 6 | 6 | 6 | 6 | |||||||||||
| AVERAGE DAILY RESULTS | |||||||||||||||
| Time Charter Equivalent per day(4) | $ | 40,835 | $ | 45,432 | $ | 43,295 | $ | 45,917 | |||||||
| (1) Available days for the fleet represent total calendar days the vessels were in Navios Midstream’s possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues. | |||||||||||||||
| (2) Operating days is the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues. | |||||||||||||||
| (3) Fleet utilization is the percentage of time that Navios Midstream’s vessels were available for revenue generating available days, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, drydockings or special surveys. | |||||||||||||||
| (4) Time Charter Equivalent (“TCE”) rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet. | |||||||||||||||
Conference Call details:
Navios Midstream's management will host a conference call today, Wednesday, October 26, 2016 to discuss the results for the third quarter and nine months ended September 30, 2016.
Conference Call details:
Call Date/Time: Wednesday, October 26, 2016 at 8:30 am ET
Call Title: Navios Midstream Q3 2016 Financial Results Conference Call
US Dial In: +1.866.703.4207
International Dial In: +1.636.692.6440
Conference ID: 8999 8164
The conference call replay will be available two hours after the live call and remain available for one week at the following numbers:
US Replay Dial In: +1.800.585.8367
International Replay Dial In: +1.404.537.3406
Conference ID: 8999 8164
Slides and audio webcast:
There will also be a live webcast of the conference call, through the Navios Midstream’s website (www.navios-midstream.com) under “Investors”. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
A supplemental slide presentation will be available on the Navios Midstream’s website under the "Investors" section by 8:00 am ET on the day of the call.
About Navios Maritime Midstream Partners L.P.
Navios Maritime Midstream Partners L.P. is a publicly traded master limited partnership which owns and operates crude oil tankers under long-term employment contracts. For more information, please visit our website at www.navios-midstream.com.
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and expectations, including with respect to Navios Midstream’s future dividends and Navios Midstream's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "may", "expects", "intends", "plans", "believes", "anticipates", "hopes", "estimates", and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Midstream at the time these statements were made. Although Navios Midstream believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Midstream. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us, tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, the aging of our vessels and resultant increases in operation and drydocking costs, the loss of any customer or charter or vessel, our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all, increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses, the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business, potential liability from litigation and our vessel operations, including discharge of pollutants, general domestic and international political conditions, competitive factors in the market in which Navios Midstream operates; risks associated with operations outside the United States; and other factors listed from time to time in the Navios Midstream's filings with the Securities and Exchange Commission including its Form 20-Fs and Form 6-Ks. Navios Midstream expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Midstream's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Midstream makes no prediction or statement about the performance of its common units.
EXHIBIT 1
| NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Expressed in thousands of U.S. Dollars) | |||||||
| September 30, 2016 | December 31, 2015 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 49,228 | $ | 37,834 | |||
| Accounts receivable, net | 1,852 | 5,110 | |||||
| Prepaid expenses and other current assets | 126 | 112 | |||||
| Due from related parties | 5,206 | 2,804 | |||||
| Total current assets | 56,412 | 45,860 | |||||
| Vessels, net | 384,000 | 400,192 | |||||
| Intangible assets | 25,986 | 28,450 | |||||
| Deferred dry dock and special survey costs, net | 11,866 | 6,066 | |||||
| Total non-current assets | 421,852 | 434,708 | |||||
| Total assets | $ | 478,264 | $ | 480,568 | |||
| LIABILITIES AND PARTNERS’ CAPITAL | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 2,091 | $ | 412 | |||
| Accrued expenses | 519 | 654 | |||||
| Due to related parties | 456 | 438 | |||||
| Deferred revenue | 2,494 | 1,931 | |||||
| Current portion of long-term debt, net of deferred finance costs and discount | 658 | 643 | |||||
| Total current liabilities | 6,218 | 4,078 | |||||
| Long-term debt, net of deferred finance costs and discount | 196,678 | 197,176 | |||||
| Total non-current liabilities | 196,678 | 197,176 | |||||
| Total liabilities | $ | 202,896 | $ | 201,254 | |||
| Commitments and contingencies | — | — | |||||
| Total Partners’ capital | |||||||
| Common Unitholders (9,619,795 units and 9,342,692 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively) | 126,363 | 126,317 | |||||
| Subordinated Series A Unitholders (1,592,920 units issued and outstanding at September 30, 2016 and December 31, 2015) | 26,808 | 27,379 | |||||
| Subordinated Unitholders (9,342,692 units issued and outstanding at September 30, 2016 and December 31, 2015) | 116,811 | 120,154 | |||||
| General Partner (419,498 units and 413,843 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively) | 5,386 | 5,464 | |||||
| Partners’ capital | 275,368 | 279,314 | |||||
| Total liabilities and Partners’ capital | $ | 478,264 | $ | 480,568 | |||
| NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Expressed in thousands of U.S. Dollars, except per unit amounts) | ||||||||||||||||
| Three Month Period ended September 30, 2016 (unaudited) | Three Month Period ended September 30, 2015 (unaudited) | Nine Month Period ended September 30, 2016 (unaudited) | Nine Month Period ended September 30, 2015 (unaudited) | |||||||||||||
| Revenue | $ | 22,209 | $ | 22,473 | $ | 69,053 | $ | 57,526 | ||||||||
| Time charter expenses | (412 | ) | (247 | ) | (1,161 | ) | (624 | ) | ||||||||
| Direct vessel expenses | (724 | ) | (373 | ) | (2,312 | ) | (951 | ) | ||||||||
| Management fees (entirely through related party transactions) | (5,244 | ) | (5,244 | ) | (15,618 | ) | (12,369 | ) | ||||||||
| General and administrative expenses | (866 | ) | (773 | ) | (2,416 | ) | (1,790 | ) | ||||||||
| Depreciation and amortization | (6,377 | ) | (6,366 | ) | (19,156 | ) | (16,319 | ) | ||||||||
| Interest expenses and finance cost | (3,207 | ) | (3,238 | ) | (9,647 | ) | (7,601 | ) | ||||||||
| Interest income | 82 | — | 151 | — | ||||||||||||
| Other (expense)/ income, net | (4 | ) | — | (53 | ) | 66 | ||||||||||
| Net income | $ | 5,457 | $ | 6,232 | $ | 18,841 | $ | 17,938 | ||||||||
| Earnings attributable to: | ||||||||||||||||
| Common unit holders | $ | 2,480 | $ | 2,814 | $ | 8,523 | $ | 8,342 | ||||||||
| Subordinated unit holders Series A | $ | 418 | $ | 480 | $ | 1,448 | $ | 895 | ||||||||
| Subordinated unit holders | $ | 2,455 | $ | 2,814 | $ | 8,498 | $ | 8,342 | ||||||||
| General Partner | $ | 104 | $ | 124 | $ | 372 | $ | 359 | ||||||||
| Earnings per unit (basic and diluted) | ||||||||||||||||
| Common unitholders: | $ | 0.26 | $ | 0.30 | $ | 0.91 | $ | 0.89 | ||||||||
| Subordinated Series A unitholders: | $ | 0.26 | $ | 0.30 | $ | 0.91 | $ | 1.46 | ||||||||
| Subordinated unitholders: | $ | 0.26 | $ | 0.30 | $ | 0.91 | $ | 0.89 | ||||||||
| General Partner: | $ | 0.26 | $ | 0.30 | $ | 0.91 | $ | 0.91 | ||||||||
| NAVIOS MARITIME MIDSTREAM PARTNERS L.P. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Expressed in thousands of U.S. Dollars) | ||||||||
| Nine Month Period Ended September 30, 2016 (unaudited) | Nine Month Period Ended September 30, 2015 (unaudited) | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net income | $ | 18,841 | $ | 17,938 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 19,156 | 16,319 | ||||||
| Amortization of deferred finance fees and bond premium | 1,056 | 2,321 | ||||||
| Amortization of dry dock and special survey costs | 2,312 | 951 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase)/ decrease in prepaid expenses and other current assets | (14 | ) | 168 | |||||
| Payment for Drydocking | (8,113 | ) | (5,638 | ) | ||||
| Decrease/ (increase) in accounts receivable | 3,258 | (4,717 | ) | |||||
| Increase in accounts payable | 1,679 | 484 | ||||||
| Decrease in accrued expenses | (135 | ) | (1,098 | ) | ||||
| (Increase) in due from/ to related parties | (2,384 | ) | (2,611 | ) | ||||
| Increase/ (decrease) in deferred revenue | 563 | (7 | ) | |||||
| Net cash provided by operating activities | $ | 36,219 | $ | 24,110 | ||||
| INVESTING ACTIVITIES | ||||||||
| Acquisition of vessels | (500 | ) | (72,252 | ) | ||||
| Net cash used in investing activities | $ | (500 | ) | $ | (72,252 | ) | ||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from Long term debt, net of deferred finance costs and discount | — | 198,081 | ||||||
| Loan repayment | (1,538 | ) | (126,513 | ) | ||||
| IPO expenses | — | (3,347 | ) | |||||
| Dividend paid | (26,295 | ) | (20,162 | ) | ||||
| Proceeds from issuance of general partner units | 75 | 551 | ||||||
| Proceeds from issuance of common units | 3,433 | — | ||||||
| Net cash (used in)/ provided by financing activities | $ | (24,325 | ) | $ | 48,610 | |||
| Net increase in cash and cash equivalents | 11,394 | 468 | ||||||
| Cash and cash equivalents, beginning of year | $ | 37,834 | $ | 30,877 | ||||
| Cash and cash equivalents, end of year | $ | 49,228 | $ | 31,345 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash interest paid | $ | 8,613 | $ | 5,256 | ||||
EXHIBIT 2
| Owned Vessels | Type | Built | Capacity (DWT) | ||||||
| Shinyo Kieran | VLCC | 2011 | 297,066 | ||||||
| Shinyo Saowalak | VLCC | 2010 | 298,000 | ||||||
| Nave Celeste | VLCC | 2003 | 298,717 | ||||||
| Shinyo Kannika | VLCC | 2001 | 287,175 | ||||||
| Shinyo Ocean | VLCC | 2001 | 281,395 | ||||||
| C. Dream | VLCC | 2000 | 298,570 | ||||||
| Option Vessels(1) | Type | Built | Capacity (DWT) | Expiration date | ||||||||
| Nave Galactic | VLCC | 2009 | 297,168 | November 18, 2016 | ||||||||
| Nave Quasar | VLCC | 2010 | 297,376 | November 18, 2016 | ||||||||
| Nave Buena Suerte | VLCC | 2011 | 297,491 | November 18, 2018 | ||||||||
| Nave Neutrino | VLCC | 2003 | 298,287 | November 18, 2018 | ||||||||
| Nave Electron | VLCC | 2002 | 305,178 | November 18, 2018 | ||||||||
| (1) Navios Midstream has options, to acquire up to five VLCCs at fair market value from Navios Acquisition. In October 2016, Navios Acquisition extended the options for three vessels as presented in the table above, for an additional two-year period until November 18, 2018. | ||||||||||||
EXHIBIT 3
Disclosure of Non-GAAP Financial Measures
1. EBITDA
EBITDA represents net income before interest and finance costs, before depreciation and amortization and income taxes. We use EBITDA as a liquidity measure and reconcile EBITDA to net cash provided by/(used in) operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by/(used in) operating activities adding back, when applicable and as the case may be, the effect of: (i) net increase/(decrease) in operating assets; (ii) net (increase)/decrease in operating liabilities; (iii) net interest cost; (iv) amortization of deferred finance charges and other related expenses; (v) provision for losses on accounts receivable; (vi) equity in affiliates, net of dividends received; (vii) payments for drydock and special survey costs; (viii) gain/(loss) on sale of assets/subsidiaries; and (ix) impairment charges. Navios Midstream believes that EBITDA is the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Midstream’s ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Midstream also believes that EBITDA is used (i) by potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Midstream’s results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA does not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA does not reflect any cash requirements for such capital expenditures. As a result of these limitations, EBITDA should not be considered as a principal indicator of Navios Midstream’s performance. Furthermore, our calculation of EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
2. Operating Surplus
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated maintenance and replacement capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Midstream’s capital assets.
Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
3. Available Cash
Available Cash generally means for each fiscal quarter, all cash on hand at the end of the quarter:
- less the amount of cash reserves established by the Board of Directors to:
- provide for the proper conduct of Navios Midstream’s business (including reserve for maintenance and replacement capital expenditures);
- comply with applicable law, any of Navios Midstream’s debt instruments, or other agreements; or
- provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters;
- provide for the proper conduct of Navios Midstream’s business (including reserve for maintenance and replacement capital expenditures);
- plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.
Available Cash is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Available cash is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
4. Reconciliation of Non-GAAP Financial Measures
| Three Month Period ended September 30, 2016 ($ ‘000) (unaudited) | Three Month Period ended September 30, 2015 ($ ‘000) (unaudited) | Nine Month Period ended September 30, 2016 ($ ‘000) (unaudited) | Nine Month Period ended September 30, 2015 ($ ‘000) (unaudited) | |||||||||||||
| Net cash provided by operating activities | $ | 16,825 | $ | 6,393 | $ | 36,219 | $ | 24,110 | ||||||||
| Net (decrease)/ increase in operating assets | (2,061 | ) | 7,252 | 4,869 | 10,187 | |||||||||||
| Net (increase)/ decrease in operating liabilities | (1,851 | ) | (317 | ) | 277 | 3,232 | ||||||||||
| Net interest cost | 3,125 | 3,238 | 9,496 | 7,601 | ||||||||||||
| Amortization of deferred finance cost and bond premium | (355 | ) | (357 | ) | (1,056 | ) | (2,321 | ) | ||||||||
| EBITDA | $ | 15,683 | $ | 16,209 | $ | 49,805 | $ | 42,809 | ||||||||
| Cash interest paid | $ | (2,853 | ) | $ | (2,881 | ) | $ | (8,613 | ) | $ | (5,256 | ) | ||||
| Cash interest income | 82 | — | 151 | — | ||||||||||||
| Maintenance and replacement capital expenditures | $ | (3,581 | ) | $ | (3,591 | ) | $ | (10,741 | ) | $ | (8,093 | ) | ||||
| Operating Surplus | $ | 9,331 | $ | 9,737 | $ | 30,602 | $ | 29,460 | ||||||||
| Cash distribution paid relating to the first six months | — | — | (17,485 | ) | (16,401 | ) | ||||||||||
| Cash reserves | $ | (469 | ) | $ | (995 | ) | $ | (4,255 | ) | $ | (4,317 | ) | ||||
| Available cash for distribution | $ | 8,862 | $ | 8,742 | $ | 8,862 | $ | 8,742 | ||||||||
| Three Month Period ended September 30, 2016 ($ ‘000) (unaudited) | Three Month Period ended September 30, 2015 ($ ‘000) (unaudited) | Nine Month Period ended September 30, 2016 ($ ‘000) (unaudited) | Nine Month Period ended September 30, 2015 ($ ‘000) (unaudited) | |||||||||||||||
| Net cash provided by operating activities | $ | 16,825 | $ | 6,393 | $ | 36,219 | $ | 24,110 | ||||||||||
| Net cash used in investing activities | $ | — | $ | — | $ | (500 | ) | $ | (72,252 | ) | ||||||||
| Net cash (used in) / provided by financing activities | $ | (5,816 | ) | $ | (9,473 | ) | $ | (24,325 | ) | $ | 48,610 | |||||||