PIRAEUS, GREECE -- (Marketwire) -- 08/25/08 -- Omega Navigation Enterprises, Inc. (NASDAQ: ONAV) (SGX: ONAV50), a provider of global marine transportation services
focusing on product tankers, announced today its financial and operational
results for the second quarter and six months ended June 30, 2008.
The Company had previously announced the declaration of its quarterly cash
dividend with respect to the second quarter of 2008 of $ 0.50 per share
payable on August 29, 2008 to stockholders of record on August 18, 2008.
Second Quarter 2008 Results
For the quarter ended June 30, 2008, Omega Navigation reported total
revenues of $ 19.3 million and Net Income of $ 8.0 million, or $ 0.53 per
basic share. Excluding a non-cash book gain on its interest rate derivative
instruments, a non-cash book loss on warrants revaluation and non-cash
incentive compensation grants, the Company generated net income of $ 5.7
million or $ 0.38 per basic share. EBITDA for the second quarter of 2008
was $ 12.6 million. Please see below for a reconciliation of EBITDA to Cash
from Operating Activities.
Net Income included $ 1.6 million primarily attributable to profit sharing
on charters of the vessels Omega Lady Sarah and Omega Emmanuel.
The Company owned and operated an average of 8 vessels, all product
carriers, during the second quarter of 2008, and 7.7 product carriers in
the second quarter of 2007. The Omega Theodore was delivered to us from the
shipyard on April 26, 2007. Excluding profit sharing, the Company's Panamax
product carriers earned an average time-charter equivalent rate of $ 25,050
per day per vessel during the second quarter of 2008, versus $ 25,017 per
day per vessel, during the second quarter of 2007. The Company's Handymax
product tankers earned an average time charter equivalent rate of $ 20,742
per vessel per day during the second quarter of 2008 versus $ 20,799 per
day per vessel during the second quarter of 2007.
Since the inception of the charters of the product tankers through the
second quarter of 2008, the profit sharing element of those charters
amounted to approximately $ 10.0 million. The Company has already received
$6.7 million of cash and has recorded profit share revenues of $ 6.8
million and currently expects to record an additional $ 3.2 million in
quarters to follow upon final settlement of such profit share. The table
below presents the amount of profit share revenues recorded per quarter.
Amount of profit share
Quarter revenues 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
Total $ 6.8 million
The Company expects to receive approximately an additional $ 3.3 million in
cash arising from the profit sharing agreements for voyages performed until
the end of the second quarter 2008.
Operating expenses for the Company's MR product tankers averaged $ 5,073
per day per vessel in the second quarter of 2008 versus $ 4,428 per day per
vessel in the second quarter of 2007. Panamax product tankers averaged
operating expenses of $ 5,201 per day per vessel in the second quarter of
2008 versus $ 4,568 per day per vessel in the second quarter of 2007. The
increase of the daily operating expenses of the Company's Panamax as well
as the MR product tankers relates mainly to an increase in crew wages.
First Six Months 2008 Results
For the six months ended June 30, 2008, Omega Navigation reported total
revenues of $ 38.2 million and Net Income of $ 10.2 million, or $ 0.67 per
basic share. Excluding a non-cash book gain on its interest rate derivative
instruments, a non-cash book loss on warrants revaluation and non-cash
incentive compensation grants, the Company earned $ 10.7 million or $ 0.70
per basic share. EBITDA for the first six months of 2008 was $ 25.3
million. Please see below for a reconciliation of EBITDA to Cash from
Operating Activities.
Net Income included $ 2.8 million of revenues primarily arising from profit
sharing on charters of the vessels Omega Lady Miriam, Omega Lady Sarah,
Omega Theodore and Omega Emmanuel.
The Company owned and operated an average of 8 vessels, all product
carriers, during the first six months of 2008, and 6.9 product carriers in
the first six months 2007. Excluding profit sharing, the Company's Panamax
product carriers earned an average time-charter equivalent rate of $ 25,063
per day per vessel during the first half of 2008, versus $ 24,977 per day
per vessel, during the first six months of 2007. The Company's Handymax
product tankers earned an average time charter equivalent rate of $ 20,751
per vessel per day during the first half of 2008 versus $ 20,809 per day
per vessel during the first six months of 2007.
Operating expenses for the MR product tankers averaged $ 4,833 per day per
vessel in the first half of 2008 versus $ 4,363 per day per vessel in the
first six months of 2007. Panamax product tankers averaged operating
expenses of $ 5,240 per day per vessel in the first six months of 2008
versus $ 4,683 per day per vessel in the first half of 2007. The increase
of the daily operating expenses of the Panamax as well as the MR product
tankers relates mainly to an increase in crew wages.
Lower Interest Expense
Due to our recent debt restructuring concluded in March 2008, the Company
has been able to take advantage of the current low interest rate
environment and lower our overall interest expenses. Approximately $ 192.5
million of the Company's outstanding debt has been either swapped out on a
fixed basis or floats with LIBOR with a floor of 2.5% and a ceiling of
5.1%. This has had the effect of lowering our overall interest rate
exposure. Interest Expense and finance costs in the second quarter of 2008
were $ 3.2 million and in the corresponding quarter of 2007 interest
expense and finance costs were $ 4.8 million. For the six months ended June
30, 2008 interest expense and finance costs were $ 7.2 million versus $ 8.6
million in the same period of 2007.
Fleet Developments
Current Fleet
Omega Navigation's current fleet includes eight double hull product tankers
with an aggregate carrying capacity of 512,358 dwt. All of the Company's
product tankers are employed under time charters having a minimum term of
three years from their respective delivery dates and are chartered to
established charterers including Norden, ST Shipping (Glencore) and Torm.
Six of the eight product tankers have profit sharing arrangements which
enable the Company to share in the charter market's upside potential. The
following table illustrates the current contract expirations and renewals:
Vessel Charter Profit Charter
Rate Sharing Expiration Renewal
----------------- -------- ------- ---------- -------------------------
Charterers' Extension
option at $28,500
Omega Queen $ 26,500 No May-09 through May-11
Charterers' Extension
option at $28,500
Omega King $ 26,500 No Jun-09 through Jun-11
Omega Lady Sarah $ 24,000 Yes Jun-09
Omega Lady Miriam $ 24,000 Yes Jul-09
Charterers' Extension
option at $24,000
Omega Prince $ 21,000 Yes Jun-09 through Jun-10
Charterers' Extension
option at $24,000
Omega Princess $ 21,000 Yes Jun-09 through Jun-10
Omega Emmanuel $ 25,500 Yes Apr-10
Omega Theodore $ 25,500 Yes May-10
Acquisition contracts
On May 19, 2008 the Company announced that it had entered into an agreement
with an unaffiliated third party to purchase two 47,000 dwt. newbuilding
double hull product/chemical tankers for $ 55.5 million each. The first
vessel is scheduled to be delivered in the second quarter of 2009 and the
second vessel is scheduled to be delivered in the third quarter of 2010.
The purchase agreement required a deposit of 10% of the purchase price that
was placed in a joint account with sellers and buyers on May 29, 2008. The
Company has entered into an agreement with a commercial bank to finance 90%
of the above deposit payment with bank debt and the remainder of $1.2
million was financed from cash available from operations. The Company has
also agreed with the same commercial bank for the financing of up to 75% of
the purchase price of the vessels at the time of their respective
deliveries. The agreed interest rate will range between 100 to 120 bps over
LIBOR depending on the applicable ratio of loan to vessels' market value
and the financial covenants are in line with the existing covenants under
our other senior secured credit facilities. At delivery, the vessels will
each be chartered for three years to ST Shipping (a subsidiary of Glencore
International A.G.) for a gross base rate of $ 21,135 per day per vessel.
In addition, the charters also provide for profit sharing, whereby the
Company will share equally in any upside above the base rate with the
charterer, based on the vessels' actual quarterly trading results.
Newbuilding contracts
On June 19, 2007, the Company announced that it had signed shipbuilding
contracts with Hyundai Mipo Dockyard, to construct and acquire five
newbuilding double hull Handymax product/chemical tankers each with a
capacity of 37,000 dwt. Four of these vessels are scheduled for delivery in
2010 with the fifth scheduled for delivery in early 2011. The purchase
price is $ 44.2 million per vessel and the payment terms are more
attractive than, what the Company believes to be industry standard.
With the addition of these seven vessels Omega's enlarged fleet will
consist of 15 product carriers with a total deadweight capacity of 791,358
tons.
The following table illustrates the delivery dates and charter arrangements
on all of the newbuildings the Company has agreed to acquire:
Profit Charter
Vessel Delivery Charter Rate Sharing Expiration
----------------------- ------------ ------------ ------------ ------------
TBN1 Jun-09 $ 21,135 Yes Jun-12
TBN2 Mar-10 No Mar-13
TBN3 Jul-10 $ 21,135 Yes Jul-13
TBN4 Jul-10
TBN5 Sep-10
TBN6 Dec-10
TBN7 Feb-11
Note: TBN2 above rate is confidential but vessel is expected to generate
annual EBITDA of about $ 6 million.
Management Commentary:
George Kassiotis, President and Chief Executive Officer of Omega
Navigation, commented: "We are pleased to have concluded our ninth
consecutive profitable quarter since our IPO in April 2006. We attribute
our strong operational and financial results to our strategy of acquiring
high quality modern vessels and seeking predictable and stable cash flows
through the long term employment of our vessels. In addition, the fact that
the charters of six of our eight product tankers have profit sharing has
enabled us to participate in the upside potential of the charter market and
thereby maximize our profitability and the return for our shareholders. The
profit sharing agreements in 2008 have allowed the Company to enjoy
particularly strong earnings.
"All of our vessels in our current fleet are under three year time charters
with established charterers pursuant to which we have secured 100% of our
operating days for 2008 and 64% for 2009. The charters on the two Panamax
Ice Class vessels delivered to us in March and April of 2007 extend to
2010. The recently announced acquisition of two newbuilding product
tankers to be delivered in the second quarter of 2009 and the third quarter
of 2010 respectively have also already been chartered out for three years,
to ST Shipping (Glencore International) bringing our overall fleet coverage
to 65% in 2009 thereby enhancing the stability and visibility of our cash
flows. In addition, a three year time charter has been concluded with NYK
Line of Japan on the first of the five newbuilding vessels we contracted
for in mid 2007. The tables above show that we have made significant
progress for both our current fleet and our newbuildings in securing time
charters for the entire fleet which will continue to allow us to achieve
strong and visible earnings and further protect our dividend.
"We would like to reiterate that we are pursuing a strategy of prudent
growth, gradually expanding our revenue and profit generation capabilities.
Based on the activity we have announced so far, we expect to add seven
newbuilding product carriers to our fleet, by 2011 thereby expanding it to
a total of 15 vessels, and solidifying our position as a strong player in
the global product tanker market. We expect to be taking delivery of these
seven vessels between the second quarter 2009 and the first quarter 2011,
at a time when newbuilding berths for product tankers around the world are
becoming increasingly hard to find. In addition, the two MR resale
acquisitions are favorably comparable to the current value of a similar
prompt delivered vessel and the newbuilding contract values for similar
vessels to our five newbuildings we ordered in June 2007 have already
appreciated since we contracted them.
"We remain optimistic about the long term fundamentals of the product
tanker market, the area of our strategic focus.
