Omega Navigation 1Q 2009 Results
Omega Navigation Enterprises, Inc. (NASDAQ: ONAV) (SES: ONAV50), a provider of global marine transportation services focusing on product tankers, announced its financial and operational results for the first quarter ended March 31, 2009.
For the quarter ended March 31, 2009, Omega Navigation reported total revenues of $18.7 million and Net Income of $6.3 million, or $0.41 per basic share, excluding a loss on its interest rate derivative instruments, a gain on warrants revaluation and incentive compensation grants expense. Including these items the Company reported Net Income of $5.7 million or $0.37 per basic share. EBITDA for the first quarter of 2009 was $13.2 million. Please see below for a reconciliation of EBITDA to Cash from
Operating Income included revenue of $1.7 million attributable to profit sharing on charters of the Omega Lady Miriam and Omega Theodore generated primarily in the fourth quarter of 2008.
The company owned and operated an average of eight vessels, all product carriers, during the first quarter of 2009, the same number as in the first quarter of 2008. The Omega Lady Sarah completed its scheduled drydock on February 16, 2009 and after 13 days of scheduled out of service time went back on hire to ST Shipping at that time. Also, the Omega Theodore was involved in a collision (no injuries incurred and no pollution) and was offhire for 9 days in this quarter. Much of the offhire time and expense related to the damage are expected to be recovered in subsequent quarters through insurance and other recovery proceeds. Excluding profit sharing, the Panamax product carriers in our fleet earned an average time-charter equivalent rate of $24,486 per day per vessel during the first quarter of 2009, versus $25,076 per day per vessel during the first quarter of 2008. The Handymax product tankers in our fleet earned an average time charter equivalent rate of $20,746 per vessel per day during the first quarter of 2009, versus $20,759 per day per vessel during the first quarter of 2008.
Since the inception of our product tankers' charters through the end of the first quarter of 2009, the profit sharing element of those charters that we have or are entitled to receive amounted to approximately $13.9 million. The Company has already received $12.4 million of cash and has recorded profit share revenues of $12.5 million, and currently expects to record an additional $1.4 million in quarters to follow for voyages performed through the first quarter of 2009. The table below presents the amount of profit share revenues recorded per quarter.
Amount of profit share revenues recorded per quarter:
1st Quarter 2007 $1.1m
2nd Quarter 2007 $1m
3rd Quarter 2007 $1.3m
4th Quarter 2007 $0.6m
1st Quarter 2008 $1.2m
2nd Quarter 2008 $1.6m
3rd Quarter 2008 $1.8m
4th Quarter 2008 $2.2m
1st Quarter 2009 $1.7m
Operating expenses for our MR product tankers averaged $5,248 per day per vessel in the first quarter of 2009, versus $4,593 per day per vessel in the first quarter of 2008. Our Panamax product tankers averaged operating expenses of $6,180 per day per vessel in the first quarter of 2009, versus $5,278 per day per vessel in the first quarter of 2008. The increase of the daily operating expenses of the vessels relates mainly due to the maintenance expenses for the Omega Lady Sarah related to her scheduled drydock in the first quarter of 2009 and insurance deductible incurred related to the collision on the Omega Theodore.
As of March 31, 2009, the company was fully compliant with all its loan covenants.
With the recent announcement of the delivery of the Omega Duke to a joint venture in which Omega Navigation has a 50% shareholding, Omega's current owned and operated fleet includes nine double hull product tankers with an aggregate carrying capacity of 559,358 dwt. The Omega Duke has been time chartered to ST Shipping (Glencore International AG) for a period of 5 years until mid 2014. With the additional announcements that the Omega Queen and Omega King have been time chartered out, eight out of nine product tankers are currently employed under time charters. The recent time charters are to established counterparties, ST Shipping and Torm A/S, respectively. Currently all of the vessels have profit sharing arrangements associated with them which enable the Company to share in the charter market's upside potential.
With these recent charters concluded, the Company has between the summer of 2009 and mid 2010 time charter coverage of 78%, inclusive of the joint venture. The Company is currently examining various chartering alternatives for the two vessels whose current time charters expire later this year.
George Kassiotis, President and Chief Executive Officer of Omega Navigation, said, "We are pleased to have concluded our twelfth consecutive quarter with strong operating income, since our IPO in April 2006. We attribute our strong operating income to our strategy of acquiring high quality modern vessels and seeking predictable and stable cash flows through the term employment of our vessels. In addition, the fact that the charters on eight of our nine product tankers have profit sharing has enabled us to participate in any upside of the charter market and thereby maximize our profitability and the return for our shareholders.
"We continue to return strong operating results even in this most challenging economic environment. With oil prices significantly below the highs we saw this past summer, we are cautiously optimistic that demand for petroleum products in the short term will rebound and we continue to be bullish about our sector going forward. Based on our current charter rates and the continued performance of each of our charterers, we believe that we are well positioned to continue to show profitable operating results even in this economic climate. Rates have improved somewhat in the second quarter from low levels seen in the first quarter and our profit sharing agreements have continued to generate revenues above the base rates.
"We also believe that we continue to have strong relationships with our commercial lenders, which are large European and Asian banks that have continued to offer their support to the Company.
"We would like to reiterate that we are continuing to pursue a strategy of prudent growth, gradually expanding our fleet and our revenue and profit generation potential.
"We remain optimistic about the long term fundamentals of the product tanker market, the area of our strategic focus. We believe that we enjoy strong competitive advantages in this market with our focused business strategy, our fleet of young high quality vessels, long term employment with established charterers, a solid and flexible capital structure and a strong management team, enabling us to continue delivering strong, stable and predictable results for our shareholders."
Gregory McGrath, Chief Financial Officer of Omega Navigation, said, "As of March 31, 2009, the Company had a ratio of net debt to book capitalization of about 64% with respect to the current eight vessel fleet which we believe are modest ratios for industry standards given our strong time charter coverage and the young age and quality of our fleet. As of March 31, 2009 we were fully compliant with all our loan covenants.
"We continue to have a strong relationship with our commercial lenders and have received their ongoing support and commitment to the Company, even in this very challenging credit market. Our balance sheet was also recently strengthened by the formation of the joint venture company which owns the Omega Duke and the consequent novation of the debt associated with that vessel from Omega to the joint venture."