Navig8 Chemical Tankers Inc. Reports Results for the Three and Twelve Months Ended December 31, 2016

NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND THE DISTRICT OF COLUMBIA) OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL

LONDON, Feb. 13, 2017 /PRNewswire/ -- Navig8 Chemical Tankers Inc. (the "Company") (N-OTC: CHEMS), an international shipping company focused on the transportation of chemicals, today announced its unaudited financial and operating results for the three and twelve months ended December 31, 2016.

Highlights

• Generated revenue of $33.9 million and net loss of $3.6 million, or $0.09 per share, for the three months ended December 31, 2016.
• Continued growth of the Company's operating fleet with the delivery of two 49,000 DWT IMO2 Interline-coated chemical tankers, Navig8 Tourmaline and Navig8 Tanzanite, and two 25,000 DWT stainless steel chemical tankers, Navig8 Spark and Navig8 Stellar, in the fourth quarter. In addition, the Company took delivery of one 25,000 DWT stainless steel chemical tanker, Navig8 Saiph, in January 2017.
• Entered into $54.3 million secured loan facility to finance the construction of two of the Company's 25,000 DWT stainless steel chemical tankers.

"The chemical tanker market remained under pressure in the fourth quarter, driven in part by fleet growth and weakness in the clean petroleum product markets that shifted swing tonnage from the product tanker market into traditional chemical tanker trades," said Nicolas Busch, Chief Executive Officer of Navig8 Chemical Tankers Inc.

"A rise in demand for chemicals, palm oil and clean petroleum products helped to absorb incremental capacity and led to improvements in the chemical tanker market beginning in November.  The market is forecast to tighten in 2017 and beyond with chemical tanker demand forecast to outpace the growth in the supply of larger chemical tankers.  Normal weather patterns are also expected to support palm oil exports, which decreased by 10% in 2016, due partly to the El Nino weather pattern."

Fleet Update

The Company has entered into contracts to acquire 32 modern, fuel-efficient newbuilding chemical tankers.  As of the date of this press release, 29 of these vessels have been delivered and are in operation.  The remaining three vessels are scheduled to be delivered by the middle of 2017.  Upon their respective deliveries, the Company's vessels have and will be deployed in commercial pools managed by the Navig8 Group, including the Chronos8, Delta8 and Stainless8 pools.  The Company's newbuilding fleet is composed of:

Eighteen IMO2 37,000 DWT Interline-coated tankers built at Hyundai Mipo, Korea ("A-Class vessels"), all of which have been delivered and have been deployed in the Delta8 pool. 

Four IMO2 49,000 DWT Interline-coated medium range tankers ("T-Class vessels") built at STX Offshore & Shipbuilding Co., Ltd. ("STX").  The Company took delivery of its final T-Class vessel: Navig8 Tanzanite in November 2016.  The T-Class vessels are currently deployed in the Chronos8 pool. 

Two IMO2 49,000 DWT Epoxy-coated medium range tankers built at Hyundai, Vinashin ("V-Class vessels").  Both V-Class vessels were delivered to the Company on bareboat charters in the first quarter of 2015; the Company purchased one of these vessels in December 2015 and the other in March 2016 pursuant to purchase obligations.  The V-Class vessels are currently deployed in the Chronos8 pool.

Six IMO2 25,000 DWT stainless steel tankers built at Kitanihon Shipbuilding Co. Ltd ("Kitanihon") and two IMO2 25,000 DWT stainless steel tankers built at Fukuoka (Japan) (together, "S-Class vessels").  The S-Class vessels will be deployed in the Stainless8 pool.  The Company has taken delivery of the first five of its S-Class vessels built at Kitanihon: Navig8 Sirius in June 2016, Navig8 Sky in August 2016, Navig8 Spark and Navig8 Stellar in October 2016 and Navig8 Saiph in January 2017. The Company expects the remaining three S-Class vessels to be delivered by August 2017.

Financing Update

On November 3, 2016, the Company announced that it had entered into a $54.3 million secured loan facility to finance the last two of the Company's S-Class vessels currently under construction at Kitanihon.  The loan facility covers approximately 65% of the contract price of the Vessels and was provided by a European bank.

Results for the three months ended December 31, 2016

For the three months ended December 31, 2016, the Company reported net loss of $3.6 million, or $0.09 per share, compared to the net income of $9.1 million for the three months ended December 31, 2015.  The decrease in net income is mainly attributable to lower gross average daily time charter equivalent ("TCE")¹ rates achieved in the three months ended December 31, 2016, partially offset by an increase in total operating days compared to the same period in the prior year, and increases in vessel operating expenses, depreciation and interest income related to the expansion of the Company's operating fleet. 

Revenue for the three months ended December 31, 2016 was $33.9 million, compared to revenue of $35.3 million for the three months ended December 31, 2015.  The total number of vessel operating days for the three months ended December 31, 2016 increased by 786 to 2,468 compared to the same period in the prior year.

The TCE rates earned by the A-Class, V-Class, T-Class and S-Class vessels in the three months ended December 31, 2016, were $13,928, $13,959, $14,849 and $15,404 per day, respectively.  The A-Class and the V-Class vessels generated $21,654 per day and $21,440 per day, respectively, during the same period in the prior year. The Company had 28 vessels operating during the three months ended December 31, 2016, all of which operate in pools from which they derive TCE revenue.

Vessel operating expenses were $15.4 million for the three months ended December 31, 2016, an increase of $5.2 million from the three months ended December 31, 2015, when the Company had only taken delivery of 19 vessels compared to 28 vessels at December 31, 2016.  Average fleet operating costs per day, including technical management fees, were approximately $5,700 per day for the three months ended December 31, 2016, which is approximately $250 per day higher than the average fleet operating costs per day during the three months ended December 31, 2015.

Depreciation expense for the three months ended December 31, 2016 was $10.4 million, an increase of $3.8 million compared to the three months ended December 31, 2015.  The Company begins to depreciate vessels in its newbuilding fleet as they are delivered. 

General and administrative expenses for the three months ended December 31, 2016, were $1.8 million, a decrease of $0.5 million from $2.3 million for the three months ended December 31, 2015. 

Interest expense for the three months ended December 31, 2016 was $9.9 million, an increase of $2.9 million from $7.0 million for the three months ended December 31, 2015 when the Company had only taken delivery of 19 of the vessels in its newbuilding program. 

Conference Call

On February 14, 2017 at 2:00PM GMT, the Company's management team will host a conference call to discuss its results for the three months ended December 31, 2016.

Participant should dial into the call 10 minutes before the scheduled time using the following number: 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In).  Please inform the operator you wish to listen to the Navig8 Chemical Tankers Inc. conference call.

A telephonic replay of the conference call will be available until February 21, 2017 by dialing +1 412 317 0088 (Standard International Dial In) and using access code 10101240.

Slides and Webcast

There will also be a live webcast of the conference call and slide presentation, available through the Company's website (www.navig8chemicaltankers.com).  Participants on the live webcast should register on the website approximately 10 minutes before the start of the webcast.

About Navig8 Chemical Tankers Inc.

Navig8 Chemical Tankers Inc. was established in 2013 as a joint venture between the Navig8 Group and funds managed by Oaktree Capital Management to capitalize on significant structural changes in the petrochemical industry and the continuing development of long-haul chemical trades.  Its best-in-class newbuilding fleet is comprised exclusively of large, fuel-efficient vessels with modern eco-designs to take greatest advantage of these shifts. The fully delivered fleet will feature a complementary mix of primarily Interline-coated and stainless steel vessels that are capable of servicing the full range of conventional and specialized chemicals cargoes.

The Company has taken delivery of 29 chemical carriers and anticipates delivery of its full 32-vessel fleet by mid-2017. The Company's fleet is contracted to operate in various chemical tanker pools managed by the Navig8 Group, the world's largest independent pool and commercial management company.

Navig8 Chemical Tankers Inc. is listed on the Norwegian OTC market under the symbol CHEMS.

Visit our website: www.navig8chemicaltankers.com 

Forward-Looking Statements and Distribution

This press release contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including the Navig8 Chemical Tankers Inc's management's examination of historical operating trends. Although the Company believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, the Company cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.

Important factors that, in the Company's view, could cause actual results to differ materially from those discussed in this press release include the strength of world economies and currencies, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the chemicals market as a result of changes in  OPEC's petroleum production levels and  worldwide oil consumption and storage, changes in the Company's operating expenses including bunker prices, dry- docking and insurance costs, 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, and other important factors described from time to time in the reports filed by the Company on the Norwegian OTC trading support system.

This communication is not for publication or distribution, directly or indirectly, in or into any state or jurisdiction into which doing so would be unlawful. The distribution of this communication may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes, should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. The Company assumes no responsibility in the event there is a violation by any person of such restrictions.

¹ Time charter equivalent, a non-US GAAP measure, is vessel revenues less voyage expenses (including bunkers and port charges but excluding pool commission).

Related Links

http://www.navig8chemicaltankers.com