ATHENS, GREECE--(Marketwire - October 19, 2010) - Omega Navigation Enterprises, Inc. (
Second Quarter 2010 Results
For the quarter ended June 30, 2010, Omega Navigation reported total revenues of $19.0 million and Net Income of $2.4 million, or $0.15 per basic share, excluding losses on interest rate derivative instruments, incentive compensation grants expense and a one time settlement fee for the termination of a purchase agreement. Including these items, the Company reported Net Loss of $0.9 million or $0.05 per basic share. Adjusted EBITDA for the second quarter of 2010 was $6.1 million. Please see below for a reconciliation of Adjusted EBITDA to Cash from Operating Activities.
The Company fully owned and operated an average of eight product carriers during the second quarter of 2010, the same number as in the second quarter of 2009. In addition, in the second quarter of 2010, the Company has held and continues to hold a 50% interest in three double hull product / chemical tankers, namely the Omega Duke, the Megacore Honami and the Megacore Hibiscus, which are discussed in greater detail under "Recent Developments -- Fleet Development" below. The Omega Duke is accounted for by the equity method and is not consolidated in the Company's financial statements, while the Megacore Honami is reflected in the consolidated earnings. The results of the Megacore Honami will be deconsolidated in future quarters. The Omega King entered into a fixed rate time charter in the second quarter of 2010. Also, the Omega Queen, the Omega Prince and the Princess have been operating under floating rate time charters in the second quarter of 2010, with rates determined based on pools of similar vessels trading in the spot market. The Panamax vessels averaged $18,552 per vessel per day and the MR's averaged $16,686 per vessel per day (for each period net of voyage expenses) for the second quarter of 2010. In the second quarter of 2009, the Panamax vessels averaged $22,898 per vessel per day and the MR's averaged $19,083 per day per vessel (for each period net of voyage expenses).
Operating expenses for the Company's MR product tankers averaged $5,169 per vessel per day in the second quarter of 2010, as compared to $5,304 per vessel per day in the second quarter of 2009. Operating expenses for the Company's Panamax product tankers averaged $5,158 per vessel per day in the second quarter of 2010, as compared to $5,735 per vessel per day in the second quarter of 2009.
Six Months 2010 Results
For the six months ended June 30, 2010, Omega Navigation reported total revenues of $34.4 million and Net Income of $4.5 million, or $0.28 per basic share excluding a loss on interest rate derivative instruments, non cash incentive compensation grants expense and a loss related to the termination of a purchase agreement. Including these items, Net loss was $0.4 million or $0.02 per share. Adjusted EBITDA for six months ended June 30, 2010 was $14.4 million. Please see below for a reconciliation of Adjusted EBITDA to Cash from Operating Activities.
Excluding profit sharing, the Company's Panamax product carriers earned an average time-charter equivalent rate of $19,807 per vessel per day during the first six months of 2010, as compared to $23,692 per vessel per day (in each period net of voyage expenses), during the first six months of 2009. The Company's Handymax product tankers earned an average time charter equivalent rate of $16,370 per vessel per day during the first six months of 2010, as compared to $19,910 per vessel per day (in each period net of voyage expenses) during the first six months of 2009.
Operating expenses for the Company's MR product tankers averaged $5,241 per vessel per day in the first six months of 2010, as compared to $5,298 per vessel per day in the first six months of 2009. Operating expenses for the Company's Panamax product tankers averaged $5,679 per vessel per day in the first six months of 2010, as compared to $5,957 per vessel per day in the first six months of 2009.
Recent Developments
Fleet Development
The Company's current fleet includes 12 double hull product tankers with an aggregate carrying capacity of approximately 680,000 dwt. Eight of the vessels are wholly owned by the Company and four of the vessels are owned through equal partnership joint ventures with a wholly owned subsidiary of Glencore International AG.
The Company has previously announced that it has entered into an equal partnership joint venture named Megacore Shipping Ltd. with a wholly-owned subsidiary of Glencore International AG to acquire two 37,000 dwt Handysize double hull chemical / product tankers and seven Panamax double hull product tankers to be constructed at Hyundai Mipo Dockyard in South Korea. The two Handysize vessels, the Megacore Honami and the Megacore Hibiscus, were delivered in February and May 2010, respectively, to companies owned by Megacore Shipping Ltd. One LR1 Panamax tanker is expected to be delivered in October 2010. Four Panamax vessels are scheduled for delivery in 2011 and two Panamax vessels are scheduled for delivery in 2012.
The construction and acquisition of the remaining seven LR1 newbuildings, owned by Megacore Shipping Ltd, that are currently under construction are funded by debt and equity contributions by the shareholders. The Company is funding the pre-delivery construction schedule with respect to three and a half of these vessels, for which bank debt financing commitments have been secured, including pre-delivery as well as post delivery financing.
Moreover, the Company and Glencore International AG (through wholly-owned subsidiaries) have entered into an equal partnership joint venture, which on July 8, 2010, took delivery of one newbuilding 47,000 dwt double hull product/ chemical tanker, the Alpine Marina (sister ship to the Omega Duke), which was constructed at the Hyundai Mipo Dockyard in South Korea. The acquisition of the Alpine Marina was funded with previously secured bank debt financing and with equity contributions among the shareholders and will not be consolidated on the Company's balance sheet. The Alpine Marina is currently operating under a five-year time charter to ST Shipping with an excess earnings arrangement.
Financial Developments
The Company is currently in advanced discussions with its lenders to extend the term of its loans under the Senior Credit Facility and the Junior Credit Facility beyond the current maturity of April 2011. Both the Senior and Junior Credit Facilities are non amortizing until their respective maturity. While both loans will mature in six months, the Company believes it will reach a satisfactory outcome prior to the loans' maturity as the Company is currently in negotiations to extend or restructure the Company's debt.
As of June 30, 2010, the Company was fully compliant with all its loan covenants. Also, as of June 30, 2010, the Company's total debt, including pre-delivery advances for newbuildings, the debt on the Megacore Honami and other vessels under construction which will be deconsolidated in future quarters, was $359.1 million, while the outstanding balance under the Senior and Junior Credit Facilities was $242.7 million and $38.3 million, respectively.
Fleet Data Panamax Tankers Handymax Tankers ---------------------- ---------------------- Three months ended Three months ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ---------- ---------- ---------- ---------- Number of vessels at end of period 6 6 3 2 Average age of fleet (in years) 5 4 3 3 Ownership days (1) 546 546 273 182 Available days (2) 546 527 273 182 Operating days (3) 546 521 273 182 Fleet Utilization (4) 100% 99% 100% 100% Voyage revenues (net of voyage expenses) (7) 10,129,614 12,067,119 4,555,234 3,473,156 Time charter equivalent (TCE) rate $/day (5)(7) 18,552 22,898 16,686 19,083 Vessel operating expenses 2,816,105 3,131,227 1,411,077 965,343 Daily vessel operating expenses $/day(6) 5,158 5,735 5,169 5,304 Six months ended Six months ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ---------- ---------- ---------- ---------- Number of vessels at end of period 6 6 3 2 Average age of fleet (in years) 5 4 3 3 Ownership days (1) 1,086 1,086 488 362 Available days (2) 1,086 1,054 488 362 Operating days (3) 1,086 1,038 488 361 Fleet Utilization (4) 100% 98% 100% 100% Voyage revenues (net of voyage expenses) (7) 21,510,116 24,971,422 7,988,491 7,207,473 Time charter equivalent (TCE) rate $/day (5)(7) 19,807 23,692 16,370 19,910 Vessel operating expenses 6,167,390 6,469,399 2,557,626 1,917,794 Daily vessel operating expenses $/day(6) 5,679 5,957 5,241 5,298 (1) Ownership days are the aggregate number of days in a period during which each vessel in the Company's fleet has been owned by the Company. Ownership days are an indicator of the size of the Company's fleet over a period and affect both the amount of revenues and the amount of expenses that the Company records during a period. (2) Available days are the number of the Company's ownership days less the aggregate number of days that the Company's 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 the Company's 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) The Company calculates fleet utilization by dividing the number of the Company's fleet's operating days during a period by the number of its 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. The six month period ended June 30, 2010 excludes an amount of $0.3 million relating to the predelivery expenses of Megacore Honami. (7) The three month period ended June 30, 2009, excludes $0.7 million of profit sharing revenue related to profit sharing on charters of the vessels, the Omega Lady Sarah, the Omega Lady Miriam, the Omega Emmanuel and the Omega Theodore. The six month period ended June 30, 2009 excludes $2.4 million of profit sharing revenue related to profit sharing on charters of the vessels the Omega Lady Sarah, the Omega Lady Miriam, the Omega Emmanuel and the Omega Theodore. Omega Navigation Enterprises Inc Consolidated Statements of Income/(Loss) (All amounts expressed in thousands of U.S. Dollars) Three months ended Six months ended ------------------------ ------------------------ June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ----------- ----------- ----------- ----------- CONTINUING OPERATIONS (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Voyage revenue 18,940 16,711 34,445 35,388 Revenue from related parties 94 - 119 - Expenses: Voyage expenses 4,255 469 4,947 769 Vessel operating expenses 4,025 4,097 8,900 8,388 Depreciation and amortization 5,227 4,787 10,142 9,476 Management fees 311 349 692 651 General and administrative expenses (including non cash compensation expense of $118, $260 for the quarter ended June 30, 2010 and 2009 respectively and $291 and $910 for the six months ended June 30, 2010 and 2009 respectively) 1,412 1,595 2,844 3,333 Foreign currency (gains)/losses (80) 80 (104) 79 ----------- ----------- ----------- ----------- Income from vessels operation 3,884 5,334 7,143 12,692 ----------- ----------- ----------- ----------- Loss on Termination of purchase agreements (3,000) (3,000) (3,000) (3,000) Income/(Loss) from Joint Venture companies (7) (479) 126 (479) ----------- ----------- ----------- ----------- Operating Income/(Expense) 877 1,855 4,269 9,213 Other income (expenses) Interest and finance costs (1,569) (2,123) (3,197) (3,915) Interest income 14 35 34 80 Change in fair value of warrants - - - 1,127 Gain/(Loss) on derivative instruments (182) (737) (1,500) (1,808) ----------- ----------- ----------- ----------- Total other income /(expenses), net (1,737) (2,825) (4,663) (4,516) ----------- ----------- ----------- ----------- INCOME/(LOSS) FROM CONTINUING OPERATIONS (860) (970) (394) 4,697 DISCONTINUED OPERATIONS Income/(Loss) from discontinued operations of the bulk carrier fleet - - - - ----------- ----------- ----------- ----------- INCOME/(Loss) FROM DISCONTINUED OPERATIONS - - - - ----------- ----------- ----------- ----------- Net income/(Loss) (860) (970) (394) 4,697 =========== =========== =========== =========== Omega Navigation Enterprises Inc Consolidated Balance Sheets (All amounts expressed in thousands of US dollars) June 30, 2010 December 31, (unaudited) 2009 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents 907 15,564 Accounts receivable, trade 2,198 1,720 Inventories 819 614 Prepayments and other 1,736 1,419 Due from related parties - 90 Restricted cash 5,543 5,807 Derivative asset 6 - ------------ ------------ Total current assets 11,209 25,214 ------------ ------------ FIXED ASSETS: Vessels, net 459,261 423,762 Property and equipment, net 91 54 Advances for vessels' under construction and acquisition 56,943 70,620 ------------ ------------ Total fixed assets 516,295 494,436 ------------ ------------ OTHER NON CURRENT ASSETS: Deferred charges 1,653 2,110 Restricted cash 32 105 Investments in Joint Ventures 11,163 5,347 Intangible assets 267 221 ------------ ------------ Total other non current assets 13,115 7,783 ------------ ------------ ============ ============ Total assets 540,619 527,433 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long term debt 285,531 343,252 Accounts payable 3,535 2,401 Accrued and other current liabilities 3,802 3,211 Deferred revenue 49 594 Derivative liability 6,504 9,909 Dividends payable 73 166 Due to related parties 399 - ------------ ------------ Total current liabilities 299,893 359,533 ------------ ------------ NON-CURRENT LIABILITIES: Long term debt, net of current portion 73,001 - Dividends payable 32 105 Other long term liabilities 1 1 ------------ ------------ Total non-current liabilities 73,034 106 ------------ ------------ ------------ ------------ COMMITMENTS AND CONTINGENCIES: - - ------------ ------------ Stockholders' equity: Common stock 159 158 Additional paid-in capital 201,910 201,618 Accumulated deficit (34,377) (33,982) ------------ ------------ Total stockholders' equity 167,692 167,794 ------------ ------------ ------------ ------------ Total liabilities and stockholders' equity 540,619 527,433 ============ ============ Omega Navigation Enterprises Inc Consolidated Statements of Cash Flows (All amounts expressed in thousands of U.S. Dollars) June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Cash flows from operating activities Net income/(loss) from continuing operations (860) (970) (394) 4,697 Net cash provided by continuing operating activities 4,445 2,152 7,633 12,584 ----------- ----------- ----------- ----------- Net cash provided by continuing and discontinued operating activities 4,445 2,152 7,633 12,584 ----------- ----------- ----------- ----------- Cash flows (used in)/provided by investing activities Net cash (used in)/provided by investing activities-continuing operations (8,936) 163 (37,653) (47) ----------- ----------- ----------- ----------- Net cash (used in)/provided by investing activities- continuing and discontinued operations (8,936) 163 (37,653) (47) ----------- ----------- ----------- ----------- Cash flows provided by /(used in) financing activities Net cash provided by/(used in) financing activities-continuing operations 2,995 (5,804) 15,363 (13,544) ----------- ----------- ----------- ----------- Net cash provided by/(used in) financing activities-continuing and discontinued operations 2,995 (5,804) 15,363 (13,544) ----------- ----------- ----------- ----------- Net (decrease in cash and cash equivalents (1,496) (3,489) (14,657) (1,007) Cash and cash equivalents at the beginning of the period 2,403 19,293 15,564 16,811 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period 907 15,804 907 15,804 =========== =========== =========== =========== 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 Six months ended June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Net cash from operating activities 4,445 2,152 7,633 12,584 Net increase/(decrease) in current assets and non current assets (1,572) 3,093 510 3,367 Net (increase)/decrease in current liabilities excluding bank debt (265) (2,911) (1,014) (4,885) Net interest expense 3,966 4,080 8,074 7,490 Warrants settled liabilities - - - 1,127 Stock based compensation expense (118) (260) (291) (910) Payments for drydocking costs - 823 - 1,528 Amortization of financing costs (352) (336) (501) (484) ----------- ----------- ----------- ----------- Adjusted EBITDA 6,104 6,641 14,411 19,817 =========== =========== =========== =========== (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 the Company's 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 the Company assesses its liquidity position because the Company believes Adjusted EBITDA presents useful information to investors regarding the Company's 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 through the ownership and operation of double hull product tankers. The current fleet includes twelve hull product tankers with a carrying capacity of about 680,000 dwt, of which two double hull product / chemical tankers, with a capacity of 47,000 dwt, and two double hull product / chemical tankers, with a capacity of 37,000 dwt., are owned through equal partnership joint ventures with a wholly owned subsidiary of Glencore International, A.G. Furthermore, as previously announced, the joint venture company has entered into shipbuilding contracts with Hyundai Mipo Dockyard in South Korea, to construct and acquire seven additional double hull product tankers with a capacity of 74,000 dwt each scheduled for delivery between October 2010 and early 2012.
The Company was incorporated in the Marshall Islands in February 2005. Its principal executive offices are located in Athens, Greece and it also maintains an office in the United States.
Omega Navigation's 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: omeganavigation@capitallink.com www.capitallink.com