Cash flow cushion from low breakeven
For 2014, 99.4% of Navios Maritime Acquisition’s (NNA) fleet is contracted. It’s expected to have a contacted daily charter-out rate of $18,549 per day. For 2015, 56.9% of the fleet is contracted out. An average contracted daily charter-out rate of $16,435 per day is expected.
For 2014, the average fully-loaded cost—including dry docking, general and administrative expenses, interest expense, and capital repayments—was $16,471. The fixed portion of revenue fully covers all rolling cost. It also generates ~$16.2 million in surplus revenue. The average fully-loaded cost for 2015 is estimated at $15,306 per day. Also, for spot exposure and days contracted on a floating rate, NNA would earn $600,000 in additional revenue per $1,000 of day rate.
NNA enjoys low cost benefits. Its vessel operating expenses are significantly lower than the industry average. Currently, NNA’s daily operating expenses are ~17% below the industry average. Other shipping companies include Teekay Tankers Ltd. (TNK), Tsakos Energy Navigation Ltd. (TNP), Scorpio Tankers Inc. (STNG), and Capital Product Partners (CPLP).
The Guggenheim Shipping ETF (SEA) tracks the companies listed above.
Under the management agreement, the operating costs were extended until May 2016. The operating costs will stay at the current levels. However, there will be a 5% decrease in Very Large Crude Carrier (or VLCC) rates. This gives NNA an advantage over the other companies.
Delivery and chartering vessels
On a year-to-date (or YTD) basis, NNA took delivery of nine tankers—six VLCCs and three MR2s. NNA continues the Navios group policy of locking in secured cash flow with creditworthy counterparties. Since the beginning of 2014, the company chartered out five VLCCs for a total of 4.5 years of coverage, seven product tankers for 6.1 years, and two chemical tankers for a total of two years of coverage.