Navios Maritime Midstream Partners L.P.
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Navios Maritime Midstream Partners L.P. Reports Financial Results for the Second Quarter and Six Months ended June 30, 2018
  • Revenue: $20.8 million in Q2; $40.6 million for the six months
  • Net cash from operating activities: $26.1 million for the six months
  • EBITDA: $14.7 million in Q2; Adjusted EBITDA: $28.4 million for the six months
  • Operating Surplus: $8.9 million in Q2; $16.7 million for the six months
  • Merger Proposal from Navios Maritime Acquisition Corporation
  • Quarterly Cash Distribution of $0.125 per unit; $0.50 per unit annualized

MONACO, July 26, 2018 (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 second quarter and the six month period ended June 30, 2018. 

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Midstream, stated, “We are pleased to report results for the second quarter of 2018. In the second quarter of 2018, we reported $14.7 million of EBITDA and $4.3 million of net income. We also announced a distribution of $0.125 per unit, representing an annualized yield of about 14%.” 

RECENT DEVELOPMENTS

Merger Proposal from Navios Acquisition

On July 2, 2018, Navios Midstream announced that its board of directors had received a proposal from Navios Maritime Acquisition Corporation (“Navios Acquisition”) (NYSE:NNA) pursuant to which Navios Acquisition would acquire the publicly held common units of Navios Midstream not already owned by Navios Acquisition in a stock for units exchange.

Subject to negotiation and execution of a definitive agreement, Navios Acquisition is proposing consideration of 6.292 Navios Acquisition shares for each outstanding publicly held common unit of Navios Midstream as part of a transaction that would be structured as a merger of Navios Midstream with and into Navios Acquisition.

The proposed transaction is subject to the negotiation and execution of a definitive agreement, approval of the board of directors of Navios Acquisition and the necessary approvals of the conflicts committee of Navios Midstream under Navios Midstream’s limited partnership agreement. The consummation of the proposed transaction would be subject to customary closing conditions. There can be no assurance that any such approvals will be forthcoming, that a definitive agreement will be executed, or that any transaction will be consummated. 

Cash Distribution

The Board of Directors of Navios Midstream declared a cash distribution for the second quarter of 2018 of $0.125 per unit. The cash distribution is payable on August 14, 2018 to unitholders of record as of August 6, 2018. 

Navios Midstream’s ability to make distributions to its unitholders depends on the performance of its subsidiaries and their ability to distribute funds to it. The ability of Navios Midstream’s subsidiaries to make distributions to it may be restricted by, among other things, the provisions of existing and future indebtedness, market conditions, applicable partnership and limited liability company laws and other laws and regulations. 

Time charter coverage

Navios Midstream has entered into charter-out agreements for its vessels, with a remaining average term of 2.8 years, which are expected to provide a stable base of revenue and distributable cash flow. Navios Midstream has currently contracted out 100.0% of its available days for 2018 and 40.8% for 2019 expecting to generate revenues, including the backstop commitment provided by Navios Acquisition, of approximately $83.7 million and $40.8 million for 2018 and 2019, respectively. The average expected daily charter-out rate for the fleet is $39,060 and $45,613 for 2018 and 2019, respectively.

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 six months ended June 30, 2018 and 2017. The information for the quarterly and six month periods ended June 30, 2018 and 2017 was derived from the unaudited condensed consolidated financial statements for the respective periods.

                                 
(in $‘000 except per unit data)   Three Month
 Period ended
 June 30, 2018
 (unaudited)
    Three Month
 Period ended
 June 30, 2017
 (unaudited)
    Six Month
 Period ended
 June 30, 2018
 (unaudited)
    Six Month
 Period ended
 June 30, 2017
 (unaudited)
 
Revenue   $ 20,790     $ 18,510     $ 40,569     $ 39,610  
EBITDA     14,741       12,412       (4,038 )     27,112  
Adjusted EBITDA     14,741       12,412       28,406 (1 )     27,112  
Net income/ (loss)     4,286       1,960       (25,282 )     6,462  
Adjusted net income     4,286       1,960       7,162 (1 )     6,462  
Earnings/ (losses) per common unit (basic and diluted)     0.21       0.10       (1.16 )     0.30  
Adjusted earnings per common unit (basic and diluted)     0.21       0.10       0.35 (1 )     0.30  
Operating Surplus     8,865       7,048       16,687       16,517  
Maintenance and replacement capital expenditure reserve     (2,576 )     (2,461 )     (5,378 )     (4,922 )

(1)  Adjusted EBITDA, Adjusted net income and Adjusted earnings per common unit (basic and diluted) for the six month period ended June 30, 2018 in this document exclude loss on sale of vessel of $32.4 million incurred in the first quarter of 2018.

EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted earnings per common unit (basic and diluted) are non-GAAP financial measure and should not be used in isolation or substitution for Navios Midstream’s results (see Exhibit II for reconciliation of EBITDA and Adjusted EBITDA). 

Three month periods ended June 30, 2018 and 2017

Revenue for the three month period ended June 30, 2018 increased by $2.3 million to $20.8 million, as compared to $18.5 million for the same period in 2017. The increase was mainly attributable to the increase in available days from 463 in the three month period ended June 30, 2017 to 517 days in the three month period ended June 30, 2018, due to certain unscheduled off-hires among which the prolonged drydock of one of our vessels incurred in the three month period ended June 30, 2017. Time Charter Equivalent (“TCE”) was $39,578 for the three month period ended June 30, 2018 and $39,342 for the three month period ended June 30, 2017.

EBITDA increased by approximately $2.3 million to $14.7 million for the three month period ended June 30, 2018, as compared to $12.4 million for the same period in 2017. The increase in EBITDA was mainly due to the $2.3 million increase in revenue.

Net income increased by approximately $2.3 million to $4.3 million for the three month period ended June 30, 2018, as compared to $2.0 million for the same period in 2017. The increase in net income of approximately $2.3 million was mainly attributable to a: (a) $2.3 million increase in EBITDA; (b) $0.5 million decrease in depreciation and amortization due to the sale of the Shinyo Kannika mitigated by the acquisition of the Nave Galactic in the first quarter of 2018; and (c) $0.1 million increase in interest income; partially mitigated by a: (i) $0.6 million increase in interest expenses and finance cost; and (ii) $0.1 million increase in direct vessel expenses.

The reserve for estimated maintenance and replacement capital expenditures for the three month periods ended June 30, 2018 and 2017 was $2.6 million and $2.5 million, respectively (please see  “Disclosure of Non-GAAP Financial Measures” in Exhibit 3).

Navios Midstream generated an Operating Surplus for the three month period ended June 30, 2018 of $8.9 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 “Disclosure of Non-GAAP Financial Measures” in Exhibit 3).

Earnings per common unit for the three month period ended June 30, 2018 were $0.21.

Six month periods ended June 30, 2018 and 2017

Revenue for the six month period ended June 30, 2018 increased by $1.0 million to $40.6 million, as compared to $39.6 million for the same period in 2017. The increase was mainly attributable to the increase in available days from 1,003 in the six month period ended June 30, 2017 to 1,039 days in the six month period ended June 30, 2018, due to certain unscheduled off-hires among which the prolonged drydock of one of our vessels incurred in the three month period ended June 30, 2017. TCE was $38,535 for the six month period ended June 30, 2018 and $38,914 for the six month period ended June 30, 2017.

EBITDA was affected by a $32.4 million book loss on the sale of the Shinyo Kannika. Excluding this item, Adjusted EBITDA was $28.4 million compared to $27.1 million for the same period in 2017. The increase in Adjusted EBITDA by $1.3 million was due to a: (a) $1.0 million increase in revenue; (b) $0.5 million increase in other income/(expense), net; and (c) $0.1 million decrease in management fees; partially mitigated by a $0.3 million increase in general and administrative expenses.

Net loss for the six month period ended June 30, 2018 amounted to $25.3 million as a result of the above mentioned $32.4 million loss on sale of vessel.  Excluding this item Adjusted net income was $7.2 million compared to $6.5 million for the same period in 2017. The increase of $0.7 million was attributable to a: (a) $1.3 million increase in Adjusted EBITDA; (b) $0.7 million decrease in depreciation and amortization due to the sale of the Shinyo Kannika mitigated by the acquisition of the Nave Galactic in the first quarter of 2018; and (c) $0.1 million increase in interest income; partially mitigated by a: (i) $0.9 million increase in interest expenses and finance cost; and (ii) $0.5 million increase in direct vessel expenses.

The reserve for estimated maintenance and replacement capital expenditures for the six month period ended June 30, 2018 and 2017 was $5.4 million and $4.9 million, respectively (please see “Disclosure of Non-GAAP Financial Measures—4. Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities” in Exhibit 3).

Navios Midstream generated an Operating Surplus for the six month period ended June 30, 2018 of $16.7 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 “Disclosure of Non-GAAP Financial Measures—4. Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities” in Exhibit 3).

Fleet Employment Profile

The following table reflects certain key indicators of Navios Midstream’s core fleet performance for the three and six month periods ended June 30, 2018 and 2017.

                                 
    Three Month
Period ended
June 30, 2018
(unaudited)
    Three Month
Period ended
June 30, 2017
(unaudited)
    Six Month
Period ended
June 30, 2018
(unaudited)
    Six Month
Period ended
June 30, 2017
(unaudited)
 
FLEET DATA                                
Available days(1)     517       463       1,039       1,003  
Operating days(2)     517       448       1,032       985  
Fleet utilization(3)     100.0 %     96.7 %     99.3 %     98.2 %
Vessels operating at period end     6       6       6       6  
AVERAGE DAILY RESULTS                                
Time Charter Equivalent per day(4)   $ 39,578     $ 39,342     $ 38,535     $ 38,914  


(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, drydock 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, drydock or special surveys.

(4 ) 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, Thursday, July 26, 2018 to discuss the results for the second quarter and six months ended June 30, 2018.

Conference Call details:

Call Date/Time: Thursday, July 26, 2018 at 8:30 am ET
Call Title: Navios Midstream Q2 2018 Financial Results Conference Call
US Dial In: +1.866.703.4207
International Dial In: +1.636.692.6440
Conference ID: 899 5637

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: 899 5637

Slides and Audio Webcast:
There will also be a live webcast of the conference call, through 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 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 employment contracts. 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 employment contracts, and any potential merger with Navios Acquisition. 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 that 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 timing and ability to consummate the potential merger with Navios Acquisition, 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 Navios Midstream’s filings with the U.S. 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.

Investor Relations Contact

Navios Maritime Midstream Partners L.P.
+1 (212) 906 8647
Investors@navios-midstream.com


EXHIBIT 1

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.  
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. Dollars)

                         
          June 30,
2018
(unaudited)
    December 31,
2017
 
ASSETS                        
Current assets                        
Cash and cash equivalents           $ 21,731     $ 27,086  
Restricted cash             —        10,000  
Accounts receivable, net             1,832       2,357  
Prepaid expenses and other current assets             3,087       3,022  
Due from related parties, current             12,420       20,086  
Total current assets             39,070       62,551  
Vessels, net             345,166       356,220  
Intangible assets             20,913       22,318  
Deferred dry dock and special survey costs, net             12,108       12,893  
Due from related parties, non-current             2,565       2,565  
Total non-current assets             380,752       393,996  
Total assets           $ 419,822     $ 456,547  
LIABILITIES AND PARTNERS’ CAPITAL                        
Current liabilities                        
Accounts payable           $ 2,414     $ 1,999  
Accrued expenses             757       572  
Deferred revenue             1,731       1,731  
Current portion of long-term debt, net of deferred finance costs and discount             682       675  
Total current liabilities             5,584       4,977  
Long-term debt, net of deferred finance costs and discount             195,491       195,839  
Total non-current liabilities             195,491       195,839  
Total liabilities           $ 201,075     $ 200,816  
Commitments and contingencies             —        —   
Total Partners’ capital                        
Common Unitholders (20,947,418 units and 19,354,498 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively)             214,488       225,742  
Subordinated Series A Unitholders (zero units and 1,592,920 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively)             —        24,992  
General Partner (427,499 units issued and outstanding at June 30, 2018 and at December 31, 2017, respectively)             4,259       4,997  
Partners’ capital             218,747       255,731  
Total liabilities and Partners’ capital           $ 419,822     $ 456,547  


NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in thousands of U.S. Dollars, except per unit amounts)

                                         
          Three Month
Period ended
June 30, 2018
(unaudited)
    Three Month
Period ended
June 30, 2017
(unaudited)
    Six Month
Period ended
June 30, 2018
(unaudited)
    Six Month
Period ended
June 30, 2017
(unaudited)
 
Revenue (includes related party revenue of $5,714 and $10,581 for the three and six months ended June 30, 2018, respectively, and $4,075 and $5,231 for the three and six months ended June 30, 2017, respectively)           $ 20,790     $ 18,510     $ 40,569     $ 39,610  
Time charter expenses             (311 )     (284 )     (539 )     (569 )
Direct vessel expenses             (1,048 )     (995 )     (2,245 )     (1,775 )
Management fees (entirely through related party transactions)             (5,187 )     (5,187 )     (10,251 )     (10,317 )
General and administrative expenses             (801 )     (630 )     (1,607 )     (1,354 )
Depreciation and amortization             (5,720 )     (6,259 )     (11,888 )     (12,552 )
Interest income             119       5       133       11  
Interest expenses and finance cost             (3,806 )     (3,203 )     (7,244 )     (6,334 )
Loss on Sale of Asset             —        —        (32,444 )     —   
Other income/ (expense), net             250       3       234       (258 )
Net income/ (loss)           $ 4,286     $ 1,960     $ (25,282 )   $ 6,462  
Earnings/ (Loss) attributable to:                                        
Common unit holders           $ 4,200     $ 918     $ (22,575 )   $ 3,026  
Subordinated Series A unit holders           $ —      $ 146     $ (2,203 )   $ 482  
Subordinated unit holders           $ —      $ 856     $ —      $ 2,827  
General Partner           $ 86     $ 40     $ (504 )   $ 127  
Earnings/ (Loss) per unit (basic and diluted)                                        
Common unitholders           $ 0.21     $ 0.10     $ (1.16 )   $ 0.30  
Subordinated Series A unitholders           $ —      $ 0.10     $ (1.49 )   $ 0.30  
Subordinated unitholders           $ —      $ 0.10     $ —      $ 0.30  
General Partner           $ 0.21     $ 0.10     $ (1.18 )   $ 0.30  


NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Expressed in thousands of U.S. Dollars)

                         
          Six Month
Period ended
June 30,
2018
(unaudited)
    Six Month
Period ended
June 30,
2017
(unaudited)
 
OPERATING ACTIVITIES                        
Net (loss)/ income           $ (25,282 )   $ 6,462  
Adjustments to reconcile net (loss)/ income to net cash provided by operating activities:                        
Depreciation and amortization             11,888       12,552  
Amortization of deferred finance fees             683       690  
Amortization of drydock and special survey costs             2,245       1,775  
Loss on Sale of Assets             32,444        
Changes in operating assets and liabilities:                        
Decrease / (increase) in prepaid expenses and other current assets             405       (2,153 )
Payments for drydocking             (3,314 )     (3,510 )
Decrease in accounts receivable             441       147  
Decrease / (increase) in due from/ to related parties, current             6,510       (3,940 )
Increase / (decrease) in accounts payable             87       (300 )
Increase in accrued expenses             9       140  
Decrease in due from related parties, non-current                   (2,565 )
Decrease in deferred revenue                   (1,326 )
Net cash provided by operating activities           $ 26,116     $ 7,972  
INVESTING ACTIVITIES                        
Acquisition of vessels             (44,950 )      
Net proceeds from sale of assets             16,206        
Net cash used in investing activities           $ (28,744 )   $  
FINANCING ACTIVITIES                        
Loan repayment             (1,025 )     (1,025 )
Dividend paid             (11,702 )     (18,049 )
Proceeds from issuance of general partner units             —        84  
Proceeds from issuance of common units             —        4,004  
Net cash used in financing activities           $ (12,727 )   $ (14,986
Net decrease in cash, cash equivalents and restricted cash             (15,355 )     (7,014
Cash, cash equivalents and restricted cash, beginning of period           $ 37,086     $ 52,791  
Cash, cash equivalents and restricted cash, end of period           $ 21,731     $ 45,777  
Supplemental disclosures of cash flow information                        
Cash interest paid           $ 6,483     $ 5,692  


EXHIBIT 2

Owned Vessels as of June 30, 2018   Type   Built   Capacity  (DWT)      
Shinyo Kieran   VLCC   2011     297,066    
Shinyo Saowalak   VLCC   2010     298,000    
Nave Galactic   VLCC   2009     297,168    
Nave Celeste   VLCC   2003     298,717    
Shinyo Ocean   VLCC   2001     281,395    
C. Dream   VLCC   2000     298,570    
                       
   
   
Option Vessels(1)   Type   Built   Capacity  (DWT)      
 
 
 
 
Expiration Date
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 three VLCCs at fair market value from Navios Maritime Acquisition Corporation until November 18, 2018. 


EXHIBIT 3

Disclosure of Non-GAAP Financial Measures

1. EBITDA

EBITDA is a non-U.S. GAAP financial measure and should not be used in isolation or as substitution for Navios Midstream’s results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

EBITDA represents net (loss)/income before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA in this document represents EBITDA excluding loss on sale of vessel, as described under “Financial Highlights”. Adjusted net (loss)/ income and Adjusted (losses)/ earnings per unit (basic and diluted) represent Net (loss)/ income and (losses)/ earnings per unit (basic and diluted), excluding certain item as described under “Financial Highlights”. We use Adjusted EBITDA as liquidity measure and reconcile EBITDA and Adjusted 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 costs and other related expenses; and (v) gain/ loss on sale of assets. Navios Midstream believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and present useful information to investors regarding Navios Midstream’s ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Midstream also believes that EBITDA and Adjusted EBITDA are 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 and Adjusted EBITDA have 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 and Adjusted EBITDA do 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 and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Midstream’s performance. Furthermore, our calculation of EBITDA and Adjusted 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 U.S. GAAP 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;

  • 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 U.S. GAAP or as a measure of profitability or liquidity.

4. Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities

                                 
    Three Month
Period ended
June 30, 2018
($ ‘000)
(unaudited)
    Three Month
Period ended
June 30, 2017
($ ‘000)
(unaudited)
    Six Month
Period ended
June 30, 2018
($ ‘000)
(unaudited)
    Six Month
Period ended
June 30, 2017
($ ‘000)
(unaudited)
 
Net cash provided by operating activities   $ 3,868     $ 6,825     $ 26,116     $ 7,972  
Net increase/ (decrease) in operating assets     7,120       1,788       (4,042 )     12,021  
Net decrease/ (increase) in operating liabilities     409       947       (96 )     1,486  
Net interest cost     3,687       3,198       7,111       6,323  
Amortization of deferred finance cost and bond premium     (343 )     (346 )     (683 )     (690 )
Loss on sale of vessel                 (32,444 )      
EBITDA   $ 14,741     $ 12,412     $ (4,038 )   $ 27,112  
Loss on sale of vessel                 32,444        
Adjusted EBITDA     14,741     $ 12,412     $ 28,406     $ 27,112  
Cash interest paid   $ (3,419 )   $ (2,915 )   $ (6,483 )   $ (5,692 )
Cash interest income     119       12       142       19  
Maintenance and replacement capital expenditures   $ (2,576 )   $ (2,461 )   $ (5,378 )   $ (4,922 )
Operating Surplus   $ 8,865     $ 7,048     $ 16,687     $ 16,517  
Cash distribution paid relating to the first six months                 (2,671 )     (9,022 )
Cash reserves   $ (6,193 )   $ 1,983     $ (11,344 )   $ 1,536  
Available cash for distribution   $ 2,672     $ 9,031     $ 2,672     $ 9,031  
    Three Month
Period ended
June 30, 2018
($ ‘000)
(unaudited)
    Three Month
Period ended
June 30, 2017
($ ‘000)
(unaudited)
    Six Month
Period ended
June 30, 2018
($ ‘000)
(unaudited)
    Six Month
Period ended
June 30, 2017
($ ‘000)
(unaudited)
 
Net cash provided by operating activities   $ 3,868     $ 6,825     $ 26,116     $ 7,972  
Net cash used in investing activities   $ (424 )   $     $ (28,744 )   $  
Net cash used in financing activities   $ (3,183 )   $ (9,310 )   $ (12,727 )   $ (14,986 )

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