SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
6-K
REPORT OF
FOREIGN PRIVATE ISSUER
PURSUANT TO RULE
13A-16
OR
15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
DATED: April 28, 2017
Commission File
No. 001-36738
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
7 Avenue de
Grande Bretagne, Office 11B2
Monte Carlo, MC 98000 Monaco
(Address of Principal Executive Offices)
Indicate by check mark whether
the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F.
Form 20-F ☒
Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as permitted by
Regulation S-T
Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as permitted by
Regulation S-T
Rule 101(b)(7):
Yes ☐ No ☒
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the
Commission pursuant to
Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b):
N/A
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
FORM
6-K
TABLE OF CONTENTS
2
The information contained in this Report is hereby incorporated by reference into the Registration Statement on
Form
F-3,
File No. 333-208623.
Operating and Financial Review and Prospects
The following is a discussion of the financial condition and results of operations for the three month periods ended March 31, 2017 and
2016 of Navios Maritime Midstream Partners L.P. (referred to herein as we, us, Navios Midstream or the Company). All of the financial statements have been prepared in accordance with generally accepted
accounting principles in the United States of America (US GAAP). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Midstreams 2016 Annual Report
filed on Form
20-F
with the Securities and Exchange Commission.
This report 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 Midstreams future dividends and Navios Midstreams growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. 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 time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Midstream at the
time this filing was 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 which 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 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
Midstreams filings with the 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 Midstreams 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.
Overview
Navios Midstream was formed on October 13, 2014, as a Marshall Islands limited partnership to own, operate and acquire crude oil tankers,
refined petroleum product tankers, chemical tankers, and LPG tankers under long-term employment contracts. Navios Maritime Midstream Partners GP LLC, a wholly-owned subsidiary of Navios Maritime Acquisition Corporation (Navios
Acquisition), was formed on October 13, 2014 to act as our general partner. On November 18, 2014, we completed our initial public offering (IPO).
Equity Transactions
On July 29,
2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement (the Sales Agreement) with S. Goldman Capital LLC, as sales agent (the Agent), pursuant to which Navios Midstream may issue and sell from
time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25.0 million.
During the quarter ended March 31, 2017, Navios Midstream issued 315,846 common units and received net proceeds of approximately
$3.8 million. Pursuant to the issuance of the common units, Navios Midstream issued 6,446 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general
partnership units were $0.1 million. As of March 31, 2017, there were outstanding: 9,991,641 common units, 9,342,692 subordinated units, 1,592,920 subordinated Series A units and 427,087 general partnership units.
3
Our Fleet
Our fleet consists of six VLCCs, which have an average remaining employment term of approximately 4.1 years, including backstop commitment from
Navios Acquisition. They are chartered to five strong counterparties, Dalian Ocean Shipping Co. Ltd. (Cosco Dalian), a Chinese state-owned enterprise, SK Shipping Company Limited (SK Shipping), Formosa Petrochemical
Corporation (Formosa Petrochemical), a Taiwan Stock Exchange-listed company, VL8 Pool Inc. (VL8) and Shell Trading Singapore (Private) Ltd. (Shell).
The following table provides summary information about our fleet as of April 27, 2017:
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Vessels
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Type
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Built/
Delivery
Date
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DWT
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Net
Charter
Rate
(1)
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Profit Share to Owner
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Expiration
Date
(2)
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Shinyo Ocean
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VLCC
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2001
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281,395
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Pool earnings
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$
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38,400
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January 2019
(3)
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Shinyo Kannika
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VLCC
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2001
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287,175
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Pool earnings
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$
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38,025
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February 2019
(3)
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Shinyo Saowalak
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VLCC
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2010
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298,000
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$
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48,153
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35% above $54,388
(4)
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June 2025
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40% above $59,388
(4)
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50% above $69,388
(4)
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Shinyo Kieran
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VLCC
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2011
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297,066
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$
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48,153
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35% above $54,388
(4)
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June 2026
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40% above $59,388
(4)
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50% above $69,388
(4)
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C. Dream
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VLCC
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2000
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298,570
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$
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29,625
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50% above $30,000
(6)
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March 2019
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40% above $40,000
(6)
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Nave Celeste
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VLCC
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2003
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298,717
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$
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17,775
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100% between $17,775
and 50% above $37,525
(7)
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January 2018
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$
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35,000
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December 2018
(5)
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(1)
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Net time
charter-out
rate per day in dollars (net of commissions).
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(2)
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Estimated dates assuming midpoint of redelivery of charterers.
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(3)
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Includes a backstop period for the Shinyo Ocean and the Shinyo Kannika. Navios Acquisition has provided a backstop commitment for a
two-year
period at the net time charter out
rate of $38,400 per day for the Shinyo Ocean and $38,025 per day for the Shinyo Kannika. All data in the table is based on a charter length inclusive of both the initial and backstop periods.
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(4)
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Calculated annually on the basis of the weighted average of the daily values of four Baltic Exchange Tanker Routes for the past four quarters adjusted for certain agreed specifications (i.e. actual consumption and other
voyage expenses). Any profit is split between the owner and the charterer with the owner receiving the percentage stated in the table above.
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(5)
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Includes a backstop period for the Nave Celeste. Navios Acquisition has provided a backstop commitment for a
two-year
period at the net time charter out rate of $35,000 per day.
All data in the table is based on a charter length inclusive of both the initial and backstop periods.
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(6)
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Calculated annually based on the actual earnings of the vessel. Any profit is split between the owner and the charterer with the owner receiving the percentage stated in the table above.
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(7)
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Rate calculated monthly and based upon daily Baltic International Tanker Routes, Route Tanker Dirty 3 ME Gulf to Japan (BITR TD3).
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Option Vessels
We have options,
exercisable through November 18, 2018, to purchase the following three VLCCs from Navios Acquisition at fair market value. Although we anticipate that we may exercise some or all of our options to purchase the following three VLCCs, the timing
of such purchases is uncertain and each such purchase is subject to various conditions, including reaching an agreement with Navios Acquisition regarding the fair market value of the vessel and the availability of financing, which we anticipate
would be from external sources. Generally, we expect to fund the acquisition of any or all of the three additional VLCCs we may elect to purchase with cash from operations, bank borrowings and the issuance of debt and equity securities.
The following table provides summary information about the vessels
subject to the options as of April 27, 2017:
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Vessels
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Purchase Option
Expiration Date
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Type
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Built/
Delivery
Date
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DWT
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Net Charter
Rate
(1)
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Profit Share to
Owner
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Employment
Expiration
Date
(2)
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Nave Buena Suerte
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November 2018
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VLCC
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2011
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297,491
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Floating Rate
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(3)
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August 2017
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Nave Neutrino
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November 2018
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VLCC
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2003
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298,287
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$
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37,520
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September 2017
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Nave Electron
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November 2018
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VLCC
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2002
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305,178
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Floating Rate
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(4)
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December 2017
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4
(1)
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Net time
charter-out
rate per day in dollars (net of commissions).
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(2)
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Estimated dates assuming midpoint of redelivery of charterers.
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(3)
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Rate is based upon daily BITR TD3. Owner receives 100% of the index rate up to $41,969 net per day, 90% up until $44,438 net per day and 50% of any amount in excess of $44,438 net per day. The contract provides a
minimum rate of $19,750 net per day.
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(4)
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Rate based on VLCC pool earnings.
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Our Customers
We provide seaborne shipping services under charters with customers that we believe are creditworthy.
For the three month period ended March 31, 2017, customers representing 10% or more of total revenue were Cosco Dalian, VL8, SK Shipping
and Shell that accounted for 49.4%, 16.9%, 12.9% and 11.9%, respectively, of our revenue. For the year ended December 31, 2016, our customers representing 10% or more of total revenue were Cosco Dalian, Formosa Petrochemical and SK Shipping
that accounted for 70.6%, 15.7% and 13.7%, respectively, of our revenue.
Although we believe that if any one of our charters were
terminated we could
re-charter
the related vessel at the prevailing market rate relatively quickly, the permanent loss of a significant customer or a substantial decline in the amount of services requested by
a significant customer could harm our business, financial condition and results of operations if we were unable to
re-charter
our vessel on a favorable basis due to the current market conditions, or otherwise.
We believe that the combination of the long-term nature of our charters (which provide for the receipt of a fixed fee for the life of the
charter) and our Management Agreement with Navios Tankers Management Inc. (the Manager) (which provides for a fixed management fee extended through December 31, 2018) will provide us with a strong base of stable cash flows.
Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charters hire
rates, which, in turn, are affected by a number of factors, including:
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the duration of the charters;
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the level of spot and long-term market rates at the time of charter;
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decisions relating to vessel acquisitions and disposals;
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the amount of time spent positioning vessels;
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the amount of time that vessels spend undergoing repairs and upgrades in drydock;
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the age, condition and specifications of the vessels; and
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the aggregate level of supply and demand in the tanker shipping industry.
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Time charters are
available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market
affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate our vessels in the long-term charter market. Vessel charter
rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control.
Trends and Factors Affecting Our Future Results of Operations
We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental
conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Please read Risk Factors in our 2016 Annual Report on Form
20-F
for a discussion of certain risks inherent in our business.
5
Results of Operations
Overview
The financial condition and the
results of operations presented for the three month periods ended March 31, 2017 and 2016 of Navios Midstream discussed below include the following entities:
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Company name
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Vessel name
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Country of
incorporation
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2017
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2016
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Navios Maritime Midstream Operating LLC
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N/A
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Marshall Islands
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1/1-3/31
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1/1-3/31
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Navios Maritime Midstream Partners L.P.
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N/A
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Marshall Islands
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1/1-3/31
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1/1-3/31
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Navios Maritime Midstream Partners Finance (US) Inc.
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N/A
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Delaware
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1/1-3/31
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1/1-3/31
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Shinyo Kannika Limited
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Shinyo Kannika
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Hong Kong
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1/1-3/31
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1/1-3/31
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Shinyo Ocean Limited
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Shinyo Ocean
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Hong Kong
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1/1-3/31
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1/1-3/31
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Shinyo Saowalak Limited
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Shinyo Saowalak
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British Virgin Is.
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1/1-3/31
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1/1-3/31
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Shinyo Kieran Limited
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Shinyo Kieran
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British Virgin Is.
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1/1-3/31
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1/1-3/31
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Shinyo Dream Limited
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C. Dream
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Hong Kong
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1/1-3/31
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1/1-3/31
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Sikinos Shipping Corporation
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Nave Celeste
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Marshall Islands
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1/1-3/31
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1/1-3/31
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The accompanying interim condensed consolidated financial statements of Navios Midstream are unaudited, but,
in the opinion of management, contain all adjustments necessary to present a fair statement of results, in all material respects, Navios Midstreams condensed consolidated financial position as of March 31, 2017 and the condensed
consolidated results of operations for the three months ended March 31, 2017 and 2016. The footnotes are condensed as permitted by the requirements for interim financial statements and, accordingly, do not include information and disclosures
required under US GAAP for complete financial statements. All such adjustments are deemed to be of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for
the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Midstreams Annual Report on Form
20-F
for the year
ended December 31, 2016.
FINANCIAL HIGHLIGHTS
The following table presents consolidated revenue and expense information for the three month periods ended March 31, 2017 and 2016.
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Three Month
Period ended
March 31,
2017
($000)
(unaudited)
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Three Month
Period ended
March 31,
2016
($000)
(unaudited)
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Revenue
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$
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21,100
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$
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24,149
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Time charter expenses
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(285
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)
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(411
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)
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Direct vessel expenses
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(780
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)
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(636
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)
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Management fees
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(5,130
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)
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(5,187
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)
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General and administrative expenses
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(724
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)
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(826
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)
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Depreciation and amortization
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(6,293
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)
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(6,401
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)
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Interest expenses and finance cost
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(3,131
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)
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(3,156
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)
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Interest income
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6
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Other expense, net
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(261
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(37
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)
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Net income
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$
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4,502
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$
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7,495
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EBITDA
(1)
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$
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14,700
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$
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17,688
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Operating Surplus
(1)
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$
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9,469
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$
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11,271
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(1)
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EBITDA and Operating Surplus are
non-GAAP
financial measures. See Reconciliation of EBITDA to Net Cash from Operating Activities, Operating Surplus for a
description of EBITDA and Operating Surplus and a reconciliation of EBITDA and Operating Surplus to the most comparable measure under US GAAP.
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Period over Period Comparisons
For the Three Month
Period ended March 31, 2017 compared to the Three Month Period ended March 31, 2016
Revenue:
Revenue for the three month period ended March 31, 2017 decreased by $3.0 million to
$21.1 million, as compared to $24.1 million for the same period in 2016. Time Charter Equivalent (TCE) was $38,547 for the three month period ended March 31, 2017 and $43,476 for the three month period ended March 31,
2016. The decrease in the TCE was mainly attributable to the decrease in the market rates during the first quarter ended March 31, 2017, as compared to the same period in 2016.
Time charter expenses:
Time charter expenses for the three month period ended March 31, 2017 were $0.3 million,
as compared to $0.4 million for the three month period ended March 31, 2016, due to a decrease in brokers commissions.
6
Direct vessel expenses:
Direct vessel expenses, comprised of the amortization
of dry dock and special survey costs, of certain vessels in our fleet amounted to $0.8 million for the three month period ended March 31, 2017, as compared to $0.6 million for the three month period ended March 31, 2016.
Management fees:
Management fees for the three month period ended March 31, 2017 decreased by $0.1 million to
$5.1 million, as compared to $5.2 million for the three month period ended March 31, 2016.
General and
administrative expenses:
Total general and administrative expenses for the three month period ended March 31, 2017 decreased by $0.1 million to $0.7 million, as compared to $0.8 million for the three month period
ended March 31, 2016, due to a $0.1 million decrease in legal and professional fees. The expenses charged by the Manager for administrative services were $0.4 million for each of the three month periods ended March 31, 2017 and
March 31, 2016.
Depreciation and amortization:
Depreciation and amortization for the three month period ended
March 31, 2017 amounted to $6.3 million as compared to $6.4 million for the three month period ended March 31, 2016. Depreciation of a vessel is calculated using an estimated useful life of 25 years for the date the vessel was
originally delivered from the shipyard. Intangible assets are amortized over the contract periods, which ranged from 6.34 to 15.00 years at inception.
Interest expense and finance cost:
Interest expense and finance cost for the three month period ended March 31, 2017
amounted to $3.1 million as compared to $3.2 million for the three month period ended March 31, 2016. As of March 31, 2017 and 2016, the outstanding weighted average loan balance was $201.9 million and $204.0 million,
respectively, and the weighted average interest rate was 5.52% and 5.50% for each of the three month periods ended March 31, 2017 and 2016, respectively.
Operating surplus:
Navios Midstream generated operating surplus for the three month period ended March 31, 2017 of
$9.5 million as compared to $11.3 million for the three month period ended March 31, 2016. Operating Surplus is a
non-GAAP
financial measure used by certain investors to assist in evaluating a
partnerships ability to make quarterly cash distributions. (See Reconciliation of EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus contained herein).
Liquidity and Capital Resources
Our primary short-term
liquidity needs will be to fund general working capital requirements and drydocking expenditures, while our long-term liquidity needs are expected to primarily relate to expansion and investment capital expenditures and other maintenance capital
expenditures and debt repayment. Expansion capital expenditures are primarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, while maintenance capital
expenditures primarily consist of drydocking expenditures and expenditures to replace vessels in order to maintain the operating capacity of or revenue generated by our fleet. We anticipate that our primary sources of funds for our short-term
liquidity needs will be cash flows from operations and borrowings which we believe will be sufficient to meet our existing short-term liquidity needs for at least the next 12 months. Generally, our long-term sources of funds will be from cash from
operations, long-term borrowings and other debt or equity financings. Please read the Equity Transactions section for a discussion of our Sales Agreement. We expect that we will rely upon external financing sources, including bank and other
borrowings, to fund acquisitions and expansion and investment capital expenditures. We cannot assure you that we will be able to secure adequate financing or obtain additional funds on favorable terms to meet our liquidity needs.
On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement (the Sales Agreement) with S. Goldman
Capital LLC, as sales agent (the Agent), pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to
$25.0 million.
During the quarter ended March 31, 2017, Navios Midstream issued 315,846 common units and received net proceeds of approximately
$3.8 million. Pursuant to the issuance of the common units, Navios Midstream issued 6,446 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general
partnership units were $0.1 million. As of March 31, 2017, there were outstanding: 9,991,641 common units, 9,342,692 subordinated units, 1,592,920 subordinated Series A units and 427,087 general partnership units.
Credit Facilities
Term Loan B:
On
June 18, 2015, Navios Midstream and Navios Finance, as
co-borrowers,
completed the issuance of the $205.0 million Term Loan B. The Term Loan B is set to mature on June 18, 2020 and is repayable
in equal quarterly installments of 0.25% of the initial principal amount of the Term Loan B, beginning on September 18, 2015, with a final payment of the aggregate principal amount of the Term Loan B, plus accrued and unpaid interest, due on
maturity. The Term Loan B bears interest at LIBOR plus 4.50% per annum, is secured by first priority mortgages covering six vessels owned by subsidiaries of Navios Midstream, in addition to other collateral, and is guaranteed by such
subsidiaries.
7
The Term Loan B requires maintenance of a loan to value ratio of no greater than 0.85 to 1.0 and a minimum
interest coverage ratio of at least 3.75 to 1.0, and other restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. The Term Loan B also provides for excess cash flow
prepayments and customary events of default.
As of March 31, 2017, an amount of $201.4 million was outstanding under this facility. The
weighted average interest rate for the three month period ended March 31, 2017 was 5.52%.
As of March 31, 2017, Navios Midstream was in
compliance with the covenants set forth in the Term Loan B.
The following table presents cash flow information derived from the unaudited condensed
consolidated statements of cash flows of Navios Midstream for the three month periods ended March 31, 2017 and 2016.
|
|
|
|
|
|
|
|
|
|
|
Three Month
Period Ended
March 31,
2017
($000)
(Unaudited)
|
|
|
Three Month
Period Ended
March 31,
2016
($000)
(Unaudited)
|
|
Net cash provided by operating activities
|
|
$
|
1,147
|
|
|
$
|
9,930
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(500
|
)
|
Net cash used in financing activities
|
|
|
(15,676
|
)
|
|
|
(9,255
|
)
|
(Decrease)/ increase in cash and cash equivalents
|
|
$
|
(14,529
|
)
|
|
$
|
175
|
|
Cash provided by operating activities for the three month period ended March 31, 2017 as compared to the three
month period ended March 31, 2016:
Net cash provided by operating activities decreased by $8.8 million to
$1.1 million for the three month period ended March 31, 2017 as compared to $9.9 million for the same period in 2016. The $8.8 million decrease is analyzed as follows:
The net income for the three month period ended March 31, 2017 was $4.5 million compared to $7.5 million for the three month
period ended March 31, 2016. In determining net cash provided by operating activities for the three month period ended March 31, 2017, net income was adjusted for the effect of depreciation and amortization of $6.3 million,
$0.3 million for amortization of deferred financing cost and $0.8 million for the amortization of drydock and special survey costs. In determining net cash provided by operating activities for the three month period ended March 31,
2016, net income was adjusted for the effect of depreciation and amortization of $6.4 million, $0.4 million for amortization of deferred financing cost and $0.6 million for the amortization of drydock and special survey costs.
Amounts due from related parties as of March 31, 2017 and December 31, 2016 was $11.4 million and $4.9 million,
respectively, which mainly related to payments of management fees and other expenses including dry docking expenses to Navios Holdings and its subsidiaries.
Accounts receivable increased by $1.5 million from $2.3 million for the year ended December 31, 2016 to $3.8 million as of
March 31, 2017 due to the increase in receivables from charterers.
Accounts payable increased by $0.2 million from
$2.4 million for the year ended December 31, 2016 to $2.6 million for the three month period ended March 31, 2017.
Prepaid expenses and other current assets increased by $2.2 million from $1.2 million for the year ended December 31, 2016 to
$3.4 million for the three month period ended March 31, 2017. The increase was mainly due to the $2.0 million working capital advances required under certain charter contracts.
Accrued expenses were $0.6 million as of March 31, 2017 and December 31, 2016.
8
Deferred voyage revenue primarily relates to cash received from charterers prior to it being
earned. These amounts are recognized as revenue over the voyage or charter period. Deferred voyage revenue amounted to $1.7 million for the three month period ended March 31, 2017 as compared to $2.5 million for the year ended
December 31, 2016.
Cash used in investing activities for the three month period ended March 31, 2017 as compared to the three month
period ended March 31, 2016:
Net cash used in investing activities was $0 for the three month period ended March 31,
2017 as compared to $0.5 million for the same period in 2016.
Cash used in financing activities for the three month period ended
March 31, 2017 as compared to the three month period ended March 31, 2016:
Net cash used in financing activities for the
three month period ended March 31, 2017 was $15.7 million, compared to $9.3 million net cash used in financing activities for the three month period ended March 31, 2016. Net cash used in financing activities for the three month
period ended March 31, 2017 primarily resulted from: (a) $10.0 million increase in restricted cash; (b) $9.0 million of dividends paid; and (c) $0.5 million of loan repayments, partially mitigated by:
(i) $3.8 million proceeds from issuance of common units; and (ii) $0.1 million proceeds from issuance of general partner units. Net cash used in financing activities for the three month period ended March 31, 2016 primarily
resulted from: (a) $0.5 million of loan repayments; and (b) $8.7 million of dividends paid.
Reconciliation of
EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus
|
|
|
|
|
|
|
|
|
|
|
Three Month
Period ended
March 31,
2017
($000)
(unaudited)
|
|
|
Three Month
Period ended
March 31,
2016
($000)
(unaudited)
|
|
Net cash provided by operating activities
|
|
$
|
1,147
|
|
|
$
|
9,930
|
|
Net increase in operating assets
|
|
|
3,729
|
|
|
|
344
|
|
Net decrease in operating liabilities
|
|
|
7,043
|
|
|
|
4,609
|
|
Net interest cost
|
|
|
3,125
|
|
|
|
3,156
|
|
Amortization of deferred finance cost and bond premium
|
|
|
(344
|
)
|
|
|
(351
|
)
|
EBITDA
|
|
$
|
14,700
|
|
|
$
|
17,688
|
|
Cash interest paid
|
|
$
|
(2,777
|
)
|
|
$
|
(2,837
|
)
|
Cash interest income
|
|
|
7
|
|
|
|
|
|
Maintenance and replacement capital expenditures
|
|
$
|
(2,461
|
)
|
|
$
|
(3,580
|
)
|
Operating Surplus
|
|
$
|
9,469
|
|
|
$
|
11,271
|
|
|
|
|
|
|
Three Month
Period ended
March 31,
2017
($000)
(unaudited)
|
|
|
Three Month
Period ended
March 31,
2016
($000)
(unaudited)
|
|
Net cash provided by operating activities
|
|
$
|
1,147
|
|
|
$
|
9,930
|
|
Net cash used in investing activities
|
|
$
|
|
|
|
$
|
(500
|
)
|
Net cash used in financing activities
|
|
$
|
(15,676
|
)
|
|
$
|
(9,255
|
)
|
9
EBITDA
EBITDA represents net income before interest and finance costs, before depreciation and amortization and income taxes. We use EBITDA as a liquidity measure and
reconcile 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 charges and
other related expenses, (v) provision for losses on accounts receivable, (vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) gain/(loss) on sale of
assets/subsidiaries, and (ix) impairment charges. Navios Midstream believes that EBITDA is the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Midstreams ability to service and/or
incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Midstream also believes that EBITDA is 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 has limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Midstreams results
as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA does 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 does not reflect any cash requirements for such capital expenditures. Because of these limitations,
EBITDA should not be considered as a principal indicator of Navios Midstreams performance. Furthermore, our calculation of EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
EBITDA represents net income plus interest and finance costs plus depreciation and amortization including accelerated amortization of time charters and income
taxes.
EBITDA decreased by approximately $3.0 million to $14.7 million for the three month period ended March 31, 2017, as compared to
$17.7 million for the same period in 2016. The decrease in EBITDA was due to a: (a) $3.0 million decrease in revenue; and (b) $0.2 million increase in other expense; partially mitigated by a: (i) $0.1 million decrease
in time charter expenses; (ii) $0.1 million decrease in management fees; and (iii) $0.1 million decrease in general and administrative expenses.
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 Midstreams capital assets.
Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a
partnerships 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 accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
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 Midstreams business (including reserve for maintenance and replacement capital expenditures);
|
|
|
|
comply with applicable law, any of Navios Midstreams 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.
|
10
Available Cash is a quantitative measure used in the publicly traded partnership investment community to assist
in evaluating a partnerships 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 accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
Borrowings
Navios Midstreams long-term third party
borrowings are reflected in its balance sheet as Long-term debt, net of deferred finance costs and discount. As of March 31, 2017, the loan balance outstanding amounted to $201.4 million under the Term Loan B, discussed above.
As of December 31, 2016, the loan balance outstanding amounted to $201.9 million under the Term Loan B, discussed above. The current portion of long-term debt amounted to $2.1 million for each of the periods ended March 31, 2017
and December 31, 2016.
Capital Expenditures
Maintenance for our vessels and expenses related to drydocking are paid to our Manager at cost under the Management Agreement.
Maintenance and replacement capital expenditures
Our partnership agreement requires our Board of Directors to deduct from operating surplus each quarter estimated maintenance and replacement
capital expenditures, as opposed to actual maintenance and replacement capital expenditures, in order to reduce disparities in operating surplus caused by fluctuating maintenance and replacement capital expenditures, such as drydocking and vessel
replacement. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, hire rates and the availability and cost of financing at the time of replacement. Our Board of Directors,
with the approval of the conflicts committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase the amount of estimated maintenance and replacement capital expenditures. We may
elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units, which could be dilutive to our existing unitholders. We must make substantial capital expenditures to maintain the
operating capacity of our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash
available to unitholders than if actual maintenance and replacement capital expenditures were deducted.
Maintenance Capital
Expenditures
. Our initial annual estimated drydocking capital expenditure reserve is expected to be $1.7 million. The estimation is based on assumptions and estimates regarding the remaining useful lives of the vessels, a relative net
investment rate, and drydocking and special survey costs based on current industry data.
Replacement Capital Expenditures
. Because
of the substantial capital expenditures we are required to make to maintain our fleet over time, our initial annual estimated replacement capital expenditures for estimating maintenance and replacement capital expenditures is expected to be
$8.1 million per year, for replacing vessels at the end of their useful lives. The future vessel replacement is based on assumptions and estimates regarding the remaining useful lives of the vessels, a relative net investment rate, vessel
replacement values based on current market conditions and residual value of the vessels at the end of their useful lives based on current steel prices.
Off-Balance
Sheet Arrangements
We have no
off-balance
sheet arrangements that have or are reasonably likely to have, a current or
future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
11
F. Contractual Obligations and Contingencies
The following table summarizes our long-term contractual obligations as of March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
(Unaudited)
|
|
|
|
Less than
1 year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
More than
5 years
|
|
|
Total
|
|
|
|
(In thousands of U.S. dollars)
|
|
Loan obligations
(1), (2)
|
|
$
|
2,050
|
|
|
$
|
4,100
|
|
|
$
|
195,262
|
|
|
$
|
|
|
|
$
|
201,412
|
|
Total contractual obligations
|
|
$
|
2,050
|
|
|
$
|
4,100
|
|
|
$
|
195,262
|
|
|
$
|
|
|
|
$
|
201,412
|
|
(1)
|
The amount identified does not include interest costs associated with the outstanding Term Loan B, which are based on LIBOR, plus the costs of complying with any applicable regulatory requirements and a margin of
4.50% per annum.
|
(2)
|
The amount identified excludes the discount associated with the outstanding Term Loan B.
|
Fleet Employment
Profile
Set forth below are selected historical and statistical data of our fleet for each of the three month periods ended
March 31, 2017 and March 31, 2016 that we believe may be useful in better understanding our fleets financial position and results of operations.
|
|
|
|
|
|
|
|
|
|
|
Three Month
Period
Ended
March 31,
2017
(unaudited)
|
|
|
Three Month
Period
Ended
March 31,
2016
(unaudited)
|
|
FLEET DATA
|
|
|
|
|
|
|
|
|
Available days
(1)
|
|
|
540
|
|
|
|
546
|
|
Operating days
(2)
|
|
|
537
|
|
|
|
545
|
|
Fleet utilization
(3)
|
|
|
99.5
|
%
|
|
|
99.8
|
%
|
Vessels operating at period end
|
|
|
6
|
|
|
|
6
|
|
AVERAGE DAILY RESULTS
|
|
|
|
|
|
|
|
|
Time Charter Equivalent per day
(4)
|
|
$
|
38,547
|
|
|
$
|
43,476
|
|
(1
)
|
Available days:
total calendar days the vessels were in Navios Midstreams possession for the relevant period after subtracting
off-hire
days associated
with major repairs, drydocking or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.
|
(2)
|
Operating days:
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:
the percentage of time that the Navios Midstreams vessels were available for generating revenue, 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 a companys efficiency in finding suitable employment for its vessels.
|
(4)
|
Time Charter Equivalent:
time charter revenues less time charter expenses during a relevant period divided by the number of available days during the period.
|
Cash Distribution Policy
Rationale for Our Cash
Distribution Policy
Our cash distribution policy reflects a basic judgment that our unitholders will be better served by our
distributing our cash available (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves) rather than retaining it. Because we believe we will generally finance any expansion capital expenditures
from external financing sources, we believe that our investors are best served by our distributing all of our available cash. Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute
all of our available cash quarterly (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves).
Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy
There is no guarantee that unitholders will receive quarterly distributions from us. Our distribution policy is subject to certain restrictions
and may be changed at any time.
12
Our ability to make distributions to our unitholders depends on the performance of our
subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited
liability company laws and other laws and regulations.
Minimum Quarterly Distribution
The amount of the minimum quarterly distribution is $0.4125 per unit, or $1.65 per unit per year. The amount of available cash from
operating surplus, which we also refer to as cash available for distributions, needed to pay the minimum quarterly distribution on all of the common units and subordinated units and the 2.0% general partner interest to be outstanding as of
March 31, 2017 for one quarter and for four quarters will be approximately:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Units
|
|
|
Distributions
|
|
|
|
|
One
Quarter
|
|
|
Four
Quarters
|
|
Common units
|
|
|
9,991,641
|
|
|
$
|
4,121,552
|
|
|
$
|
16,486,208
|
|
Subordinated Series A units
|
|
|
1,592,920
|
|
|
|
657,080
|
|
|
|
2,628,318
|
|
Subordinated units
|
|
|
9,342,692
|
|
|
|
3,853,860
|
|
|
|
15,415,442
|
|
General Partner interest
(1)
|
|
|
427,087
|
|
|
|
176,173
|
|
|
|
704,694
|
|
Total
|
|
|
21,354,340
|
|
|
$
|
8,808,665
|
|
|
$
|
35,234,662
|
|
(1)
|
The number of general partner units is determined by multiplying the total number of units deemed to be outstanding (i.e., the total number of common and subordinated units outstanding divided by 98.0%) by the general
partners 2.0% general partner interest.
|
During the subordination period, before we make any quarterly distributions
to subordinated unitholders, our common unitholders are entitled to receive payment of the full minimum quarterly distribution plus any arrearages in distributions from prior quarters. The amount of the minimum quarterly distribution is
$0.4125 per unit, or $1.65 per unit per year. We cannot guarantee, however, that we will pay the minimum quarterly distribution or any amount on the common units in any quarter.
In general, our general partner is entitled to 2.0% of all distributions that we make prior to our liquidation. The general partners
initial 2.0% interest in these distributions, however, may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its initial 2.0% general partner
interest. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest.
On January 23, 2017, the Board of Directors authorized its quarterly cash distribution for the three month period ended December 31,
2016 of $0.4225 per unit. The distribution was paid on February 14, 2017 to all holders of record of common, subordinated, subordinated Series A units and general partner units on February 9, 2017. The aggregate amount of the distribution
paid was $9.0 million.
On April 24, 2017, the Board of Directors of Navios Midstream authorized its quarterly cash distribution
for the three month period ended March 31, 2017 of $0.4225 per unit. The distribution is payable on May 11, 2017 to all holders of record of common, subordinated, subordinated Series A units and general partner units on May 5, 2017.
The aggregate amount of the declared distribution is anticipated to be $9.0 million.
Incentive Distribution Rights
Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from
operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the incentive distribution rights, but may transfer these rights separately from its general
partner interest, subject to restrictions in the partnership agreement.
13
The following table illustrates the percentage allocations of the additional available cash from
operating surplus among the unitholders and our general partner up to the various target distribution levels. The amounts set forth under Marginal Percentage Interest in Distributions are the percentage interests of the unitholders and
our general partner in any available cash from operating surplus we distribute up to and including the corresponding amount in the column Total Quarterly Distribution Target Amount, until available cash from operating surplus we
distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than
the minimum quarterly distribution. The percentage interests shown for our general partner assume that our general partner maintains its 2.0% general partner interest and assume our general partner has not transferred the incentive distribution
rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Quarterly
Distribution
Total Amount
|
|
|
Marginal Percentage
Interest
in Distributions
|
|
|
|
Unitholders
|
|
|
General
Partner
|
|
|
Holders of
IDRs
|
|
Minimum Quarterly Distribution
|
|
$
|
|
|
0.4125
|
|
|
|
98.0
|
%
|
|
|
2.0
|
%
|
|
|
0
|
%
|
First Target Distribution
|
|
up to $
|
|
|
0.4744
|
|
|
|
98.0
|
%
|
|
|
2.0
|
%
|
|
|
0
|
%
|
Second Target Distribution
|
|
above $
|
|
|
0.4744
|
|
|
|
85.0
|
%
|
|
|
2.0
|
%
|
|
|
13.0
|
%
|
|
|
up to $
|
|
|
0.5156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Target Distribution
|
|
above $
|
|
|
0.5156
|
|
|
|
75.0
|
%
|
|
|
2.0
|
%
|
|
|
23.0
|
%
|
|
|
up to $
|
|
|
0.6188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
above $
|
|
|
0.6188
|
|
|
|
50.0
|
%
|
|
|
2.0
|
%
|
|
|
48.0
|
%
|
Related Party Transactions
Management fees:
On November 18, 2014, the Company entered into a Management Agreement with the Manager pursuant to which the
Manager provides commercial and technical management services to Navios Midstreams vessels for a daily fee of $9,500 per VLCC tanker vessel that had originally been fixed until November 2016.
In October 2016, Navios Midstream amended its existing Management Agreement with the Manager to extend the fixed fee period for
commercial and technical management services of its fleet, until December 31, 2018 at the current rate of $9,500 per day per VLCC. Dry docking expenses are reimbursed at cost for all vessels.
Management fees for the three month periods ended March 31, 2017 and 2016 amounted to $5.1 million and $5.2 million,
respectively.
General and administrative expenses:
On November 18, 2014, Navios Midstream entered into a Administrative
Services Agreement with the Manager, expiring on November 18, 2019, pursuant to which the Manager provides certain administrative management services to Navios Midstream which include: bookkeeping, audit and accounting services, legal and
insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other services. The Manager is reimbursed for reasonable costs and expenses.
Total general and administrative expenses for the three month periods ended March 31, 2017 and March 31, 2016 amounted to
$0.7 million and $0.8 million, respectively. For each of the three month periods ended March 31, 2017 and March 31, 2016, the expenses charged by Navios Maritime Holdings Inc. (Navios Holdings) for administrative
services were $0.4 million.
Balances due from related parties:
Amounts due from related parties as of March 31,
2017 and December 31, 2016, were $11.4 million and $4.9 million, respectively, and mainly related to payments of management fees and other expenses, including dry docking expenses.
Omnibus Agreement:
On November 18, 2014, Navios Midstream entered into an omnibus agreement, with Navios Acquisition, Navios
Holdings and Navios Maritime Partners L.P. (Navios Partners) in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to
acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years. The omnibus agreement contains significant exceptions that will allow Navios Acquisition,
Navios Holdings, Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.
Under the omnibus agreement, Navios Midstream and its subsidiaries granted to Navios Acquisition a right of first offer on any proposed sale,
transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and related charters owned or acquired by Navios Midstream. Likewise, Navios Acquisition granted a similar
right of first offer to Navios Midstream for any of the VLCCs, crude oil tanker, refined petroleum product tanker, LPG tanker or chemical tanker under charter for five or more years it might own. These rights of first offer will not apply to a
(a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party or (b) merger with or into, or sale of substantially all of the assets
to, an unaffiliated third-party.
Backstop Agreements:
On November 18, 2014, Navios Acquisition entered into backstop
agreements with Navios Midstream. In accordance with the terms of the backstop agreements, Navios Acquisition has provided a backstop commitment at a net rate of $35,000 per day for the Nave Celeste, $38,400 per day for the Shinyo Ocean and
$38,025 per day for the Shinyo Kannika. Following the expiration of their original charter contracts and the redelivery of the Nave Celeste, the Shinyo Ocean and the Shinyo Kannika in
14
the first quarter of 2017, Navios Midstream has entered into new charter contracts for the above vessels with third parties. Those contracts provide for index linked charter rates or pool
earnings as the case may be. The backstop rates apply for a
two-year
period as of the redelivery of each of the vessels from its original charterer, if the actual rates achieved are below the agreed
backstop rates for each of the vessels. For the three month period ended March 31, 2017 backstop commitment was $1.2 million ($0 for the three month period ended March 31, 2016).
General Partner Option Agreement:
Navios Holdings has a
ten-year
option to purchase a
minimum of 25% of the general partner interest held by the general partner, the incentive distribution rights held by the general partner and/or the membership interests in the general partner from Navios Acquisition, each at fair market value. The
option expires on November 18, 2024.
Option Vessels:
Navios Midstream has options expiring on November 18,
2018 to acquire the Buena Suerte, the Nave Neutrino and the Nave Electron from Navios Acquisition.
Quantitative and Qualitative Disclosures
about Market Risks
Foreign Exchange Risk
Our functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations
may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than U.S. dollar are translated at the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized. Expenses incurred in foreign currencies against
which the U.S. Dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increases in value.
Interest
Rate Risk
Borrowings under our credit facility bear interest at rates based on a premium over U.S. $ LIBOR except for the interest
rate on the Notes which is fixed. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the three month period ended March 31, 2017, we paid interest on our outstanding debt at a weighted
average interest rate of 5.52%. A 1% increase in LIBOR would have increased our interest expense for the three month period ended March 31, 2017 by $0.5 million. For the three month period ended March 31, 2016, we paid interest on our
outstanding debt at a weighted average interest rate of 5.50%.
Concentration of Credit Risk
Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts
receivable. We closely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history. For the three month period ended March 31, 2017, customers
representing 10% or more of total revenue were Cosco Dalian, VL8, SK Shipping and Shell that accounted for 49.4%, 16.9%, 12.9% and 11.9%, respectively, of our revenue.
For the three month period ended March 31, 2016, customers representing 10% or more of total revenue were Cosco Dalian, Formosa
Petrochemical and SK Shipping, which accounted for 73.7%, 14.2% and 12.1%, respectively.
Inflation
Inflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not consider
inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.
Critical Accounting Policies
Our interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment
and the methods of their application that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from
these estimates under different assumptions or conditions.
Critical accounting policies are those that reflect significant judgments or
uncertainties, and potentially result in materially different results under different assumptions and conditions. For a description of all of our significant accounting policies, see Note 2 to the Notes to the consolidated financial statements,
included in the annual report on Form
20-F
for the year ended December 31, 2016.
15
N
AVIOS MARITIME MIDSTREAM PARTNERS L.P.
F-1
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars except unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3
|
|
|
$
|
38,262
|
|
|
$
|
52,791
|
|
Restricted cash
|
|
|
3
|
|
|
|
10,000
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
|
|
3,804
|
|
|
|
2,264
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
3,357
|
|
|
|
1,168
|
|
Due from related parties
|
|
|
8
|
|
|
|
11,368
|
|
|
|
4,864
|
|
Total current assets
|
|
|
|
|
|
|
66,791
|
|
|
|
61,087
|
|
Vessels, net
|
|
|
4
|
|
|
|
372,888
|
|
|
|
378,444
|
|
Intangible assets
|
|
|
5
|
|
|
|
24,427
|
|
|
|
25,164
|
|
Deferred dry dock and special survey costs, net
|
|
|
|
|
|
|
10,306
|
|
|
|
11,086
|
|
Total
non-current
assets
|
|
|
|
|
|
|
407,621
|
|
|
|
414,694
|
|
Total assets
|
|
|
|
|
|
$
|
474,412
|
|
|
$
|
475,781
|
|
LIABILITIES AND PARTNERS CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
$
|
2,620
|
|
|
$
|
2,386
|
|
Accrued expenses
|
|
|
|
|
|
|
592
|
|
|
|
602
|
|
Deferred revenue
|
|
|
|
|
|
|
1,731
|
|
|
|
2,494
|
|
Current portion of long-term debt, net of deferred finance costs and discount
|
|
|
6
|
|
|
|
665
|
|
|
|
661
|
|
Total current liabilities
|
|
|
|
|
|
|
5,608
|
|
|
|
6,143
|
|
Long-term debt, net of current portion and net of deferred finance costs
|
|
|
6
|
|
|
|
196,342
|
|
|
|
196,515
|
|
Total
non-current
liabilities
|
|
|
|
|
|
|
196,342
|
|
|
|
196,515
|
|
Total liabilities
|
|
|
|
|
|
$
|
201,950
|
|
|
$
|
202,658
|
|
Commitments and contingencies
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Total Partners capital
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Unitholders (9,991,641 units and 9,675,795 units issued and outstanding at March 31,
2017 and December 31, 2016, respectively)
|
|
|
|
|
|
|
127,299
|
|
|
|
125,635
|
|
Subordinated Series A Unitholders (1,592,920 units issued and outstanding at March 31, 2017
and none at December 31, 2016)
|
|
|
|
|
|
|
26,256
|
|
|
|
26,593
|
|
Subordinated Unitholders (9,342,692 units issued and outstanding at March 31, 2017 and
December 31, 2016)
|
|
|
|
|
|
|
113,576
|
|
|
|
115,552
|
|
General Partner (427,087 units issued and outstanding at March 31, 2017 and 420,641 issued
and outstanding at December 31, 2016)
|
|
|
|
|
|
|
5,331
|
|
|
|
5,343
|
|
Partners capital
|
|
|
|
|
|
|
272,462
|
|
|
|
273,123
|
|
Total liabilities and Partners capital
|
|
|
|
|
|
$
|
474,412
|
|
|
$
|
475,781
|
|
See unaudited condensed notes to the condensed consolidated financial statements.
F-2
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Expressed in thousands of U.S. Dollars, except unit and per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
Three Month
Period ended
March 31,
2017
(unaudited)
|
|
|
Three Month
Period ended
March 31,
2016
(unaudited)
|
|
Revenue (includes related party revenue of $1,155 and $0 for the three months ended March 31,
2017 and 2016, respectively)
|
|
|
|
|
|
$
|
21,100
|
|
|
$
|
24,149
|
|
Time charter expenses
|
|
|
|
|
|
|
(285
|
)
|
|
|
(411
|
)
|
Direct vessel expenses
|
|
|
|
|
|
|
(780
|
)
|
|
|
(636
|
)
|
Management fees (entirely through related party transactions)
|
|
|
8
|
|
|
|
(5,130
|
)
|
|
|
(5,187
|
)
|
General and administrative expenses
|
|
|
8
|
|
|
|
(724
|
)
|
|
|
(826
|
)
|
Depreciation and amortization
|
|
|
4, 5
|
|
|
|
(6,293
|
)
|
|
|
(6,401
|
)
|
Interest expenses and finance cost
|
|
|
6
|
|
|
|
(3,131
|
)
|
|
|
(3,156
|
)
|
Interest income
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Other expense, net
|
|
|
|
|
|
|
(261
|
)
|
|
|
(37
|
)
|
Net income
|
|
|
|
|
|
$
|
4,502
|
|
|
$
|
7,495
|
|
Earnings attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
|
|
|
|
$
|
2,108
|
|
|
$
|
3,384
|
|
Subordinated Series A unit holders
|
|
|
|
|
|
$
|
336
|
|
|
$
|
577
|
|
Subordinated unit holders
|
|
|
|
|
|
$
|
1,971
|
|
|
$
|
3,384
|
|
General Partner
|
|
|
|
|
|
$
|
87
|
|
|
$
|
150
|
|
Earnings per unit (basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unitholders:
|
|
|
|
|
|
$
|
0.22
|
|
|
$
|
0.36
|
|
Subordinated Series A unitholders:
|
|
|
|
|
|
$
|
0.21
|
|
|
$
|
0.36
|
|
Subordinated unitholders:
|
|
|
|
|
|
$
|
0.19
|
|
|
$
|
0.36
|
|
General Partner:
|
|
|
|
|
|
$
|
0.21
|
|
|
$
|
0.36
|
|
See unaudited condensed notes to the condensed consolidated financial statements.
F-3
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
Three Month
Period ended
March 31,
2017
(unaudited)
|
|
|
Three Month
Period ended
March 31,
2016
(unaudited)
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
$
|
4,502
|
|
|
$
|
7,495
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
4,5
|
|
|
|
6,293
|
|
|
|
6,401
|
|
Amortization of deferred finance fees
|
|
|
|
|
|
|
344
|
|
|
|
351
|
|
Amortization of dry dock and special survey costs
|
|
|
|
|
|
|
780
|
|
|
|
636
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)/ decrease in prepaid expenses and other current assets
|
|
|
|
|
|
|
(2,189
|
)
|
|
|
35
|
|
Increase in accounts receivable
|
|
|
|
|
|
|
(1,540
|
)
|
|
|
(379
|
)
|
Increase in accounts payable
|
|
|
|
|
|
|
234
|
|
|
|
1,404
|
|
(Decrease)/ increase in accrued expenses
|
|
|
|
|
|
|
(10
|
)
|
|
|
12
|
|
Increase in due from/ to related parties
|
|
|
8
|
|
|
|
(6,504
|
)
|
|
|
(6,588
|
)
|
(Decrease)/ increase in deferred revenue
|
|
|
|
|
|
|
(763
|
)
|
|
|
563
|
|
Net cash provided by operating activities
|
|
|
|
|
|
$
|
1,147
|
|
|
$
|
9,930
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of vessels
|
|
|
|
|
|
|
|
|
|
|
(500
|
)
|
Net cash used in investing activities
|
|
|
|
|
|
$
|
|
|
|
$
|
(500
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan repayment
|
|
|
|
|
|
|
(513
|
)
|
|
|
(513
|
)
|
Dividend paid
|
|
|
|
|
|
|
(9,019
|
)
|
|
|
(8,742
|
)
|
Proceeds from issuance of general partner units
|
|
|
|
|
|
|
79
|
|
|
|
|
|
Proceeds from issuance of common units
|
|
|
|
|
|
|
3,777
|
|
|
|
|
|
Increase in restricted cash
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
|
$
|
(15,676
|
)
|
|
$
|
(9,255
|
)
|
Net (decrease)/ increase in cash and cash equivalents
|
|
|
|
|
|
|
(14,529
|
)
|
|
|
175
|
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
|
$
|
52,791
|
|
|
$
|
37,834
|
|
Cash and cash equivalents, end of year
|
|
|
|
|
|
$
|
38,262
|
|
|
$
|
38,009
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest paid
|
|
|
|
|
|
$
|
2,777
|
|
|
$
|
2,837
|
|
See unaudited condensed notes to the condensed consolidated financial statements.
F-4
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS CAPITAL
(Expressed in thousands of U.S. Dollars except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partners
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partner
|
|
|
Common
Unitholders
|
|
|
Subordinated
Unitholders
|
|
|
Subordinated
Series A
Unitholders
|
|
|
Total
Partners
Capital
|
|
|
Total
|
|
|
|
Units
|
|
|
$
|
|
|
Units
|
|
|
$
|
|
|
Units
|
|
|
$
|
|
|
Units
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Consolidated Balance December 31, 2015
|
|
|
413,843
|
|
|
|
5,464
|
|
|
|
9,342,692
|
|
|
|
126,317
|
|
|
|
9,342,692
|
|
|
|
120,154
|
|
|
|
1,592,920
|
|
|
|
27,379
|
|
|
|
279,314
|
|
|
|
279,314
|
|
Net Income
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
3,384
|
|
|
|
|
|
|
|
3,384
|
|
|
|
|
|
|
|
577
|
|
|
|
7,495
|
|
|
|
7,495
|
|
Cash distribution
|
|
|
|
|
|
|
(175
|
)
|
|
|
|
|
|
|
(3,947
|
)
|
|
|
|
|
|
|
(3,947
|
)
|
|
|
|
|
|
|
(673
|
)
|
|
|
(8,742
|
)
|
|
|
(8,742
|
)
|
Consolidated Balance March 31, 2016
|
|
|
413,843
|
|
|
|
5,439
|
|
|
|
9,342,692
|
|
|
|
125,754
|
|
|
|
9,342,692
|
|
|
|
119,591
|
|
|
|
1,592,920
|
|
|
|
27,283
|
|
|
|
278,067
|
|
|
|
278,067
|
|
Consolidated Balance December 31, 2016
|
|
|
420,641
|
|
|
|
5,343
|
|
|
|
9,675,795
|
|
|
|
125,635
|
|
|
|
9,342,692
|
|
|
|
115,552
|
|
|
|
1,592,920
|
|
|
|
26,593
|
|
|
|
273,123
|
|
|
|
273,123
|
|
Net Income
|
|
|
|
|
|
|
87
|
|
|
|
|
|
|
|
2,108
|
|
|
|
|
|
|
|
1,971
|
|
|
|
|
|
|
|
336
|
|
|
|
4,502
|
|
|
|
4,502
|
|
Equity offering
|
|
|
6,446
|
|
|
|
79
|
|
|
|
315,846
|
|
|
|
3,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,856
|
|
|
|
3,856
|
|
Cash distribution
|
|
|
|
|
|
|
(178
|
)
|
|
|
|
|
|
|
(4,221
|
)
|
|
|
|
|
|
|
(3,947
|
)
|
|
|
|
|
|
|
(673
|
)
|
|
|
(9,019
|
)
|
|
|
(9,019
|
)
|
Consolidated Balance March 31, 2017
|
|
|
427,087
|
|
|
|
5,331
|
|
|
|
9,991,641
|
|
|
|
127,299
|
|
|
|
9,342,692
|
|
|
|
113,576
|
|
|
|
1,592,920
|
|
|
|
26,256
|
|
|
|
272,462
|
|
|
|
272,462
|
|
See unaudited condensed notes to the condensed consolidated financial statements.
F-5
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
NOTE 1: DESCRIPTION OF BUSINESS
Navios Maritime
Midstream Partners L.P. (Navios Midstream, the Company or the Partnership) (NYSE: NAP), was formed in The Republic of the Marshall Islands on October 13, 2014. Navios Maritime Midstream Partners GP LLC (the
General Partner), a Marshall Islands limited liability company and wholly-owned subsidiary of Navios Maritime Acquisition Corporation (Navios Acquisition), was also formed on that date to act as the General Partner of Navios
Midstream and receive a 2.0% general partner interest.
In connection with the initial public offering (IPO) of Navios Midstream in November
2014, Navios Midstream acquired all of the outstanding shares of capital stock of four of Navios Acquisitions vessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in
exchange for: (i) all of the estimated net proceeds from the IPO amounting to $110,403; (ii) $104,451 of the $126,000 borrowings under Navios Midstreams new credit facility; (iii) 9,342,692 subordinated units and 1,242,692
common units; and (iv) 381,334 general partner units, representing a 2.0% general partner interest in Navios Midstream, and all of the incentive distribution rights in Navios Midstream, to our General Partner.
On or prior to the closing of the IPO, Navios Midstream entered into the following agreements: a) a share purchase agreement with Navios Acquisition pursuant
to which Navios Midstream will have options, exercisable at any time during a
two-year
period until November 18, 2016, to acquire the capital stock of up to seven of its subsidiaries that own seven VLCCs
and the related time charters; b) a management agreement (the Management Agreement) with Navios Tankers Management Inc. (the Manager), a subsidiary of Navios Maritime Holdings Inc. (Navios Holdings), pursuant to
which the Manager provides Navios Midstream commercial and technical management services; c) an administrative services agreement (the Administrative Services Agreement) with the Manager pursuant to which the Manager provides Navios
Midstream administrative services; and d) an omnibus agreement with Navios Holdings, Navios Acquisition, Navios Maritime Partners L.P. (Navios Partners) and the General Partner governing, among other things, when Navios Midstream, Navios
Holdings, Navios Acquisition and Navios Partners may compete against each other as well as rights of first offer on VLCCs, crude oil tankers, refined petroleum product tankers, chemical tankers and LPG tankers.
In June 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste and the C. Dream from Navios
Acquisition for an aggregate purchase price of $100,000. The aggregate purchase price consisted of 1,592,920 subordinated Series A Units, issued to Navios Acquisition, and $73,000 cash consideration. The rights and terms of the subordinated Series A
Units are substantially similar to those of the subordinated units in terms of rights such as voting and distributions; provided, however, the subordinated Series A Units are senior in preference in liquidation to the subordinated units and unlike
the subordinated units that convert at the end of the subordination period (as such period is determined pursuant to the partnership agreement), all of the outstanding subordinated Series A Units will automatically convert into common units on a
one-for-one
basis on the earlier of (i) June 18, 2018, or (ii) the Liquidation Date, as defined in the partnership agreement.
Navios Midstreams principal activity is to own, operate and acquire crude oil tankers under long-term employment contracts as well as refined petroleum
product tankers, chemical tankers, and liquefied petroleum gas, or LPG, tankers under long-term employment contracts. The Company intends to charter the vessels under long-term employment contracts to international oil companies, refiners, and large
vessel operators.
As of March 31, 2017, there were outstanding: 9,991,641 common units, 9,342,692 subordinated units, 1,592,920 subordinated Series
A Units and 427,087 general partnership units. As of March 31, 2017, Navios Acquisition owned a 59.03% limited partner interest in Navios Midstream, which included a 2.0% general partner interest.
As of March 31, 2017, the Company owned six VLCC tanker vessels.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
The accompanying interim condensed consolidated financial statements are unaudited, but, in the opinion of management,
reflect all adjustments for a fair statement of Navios Midstreams condensed consolidated financial position, statements of income and cash flows for the periods presented. Adjustments consist of normal, recurring entries. The yearend condensed
balance sheet data was derived from audited financial statements, but does not include all disclosure required by accounting principles generally accepted in the United States of America (GAAP). The results of operations for the interim
periods are not necessarily indicative of results for the full year. The footnotes are condensed as permitted by the requirements for interim
F-6
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
financial statements and accordingly, do not include information and disclosures required under GAAP for complete financial statements. These interim financial statements should be read in
conjunction with the Companys consolidated financial statements and notes included in Navios Midstreams 2016 Annual Report filed on Form
20-F
with the Securities and Exchange Commission
(SEC).
(b) Principles of consolidation:
The accompanying interim condensed consolidated financial statements include the
accounts of Navios Midstream, a Marshall Islands corporation, and its subsidiaries that are all 100% owned. All significant intercompany balances and transactions have been eliminated in the condensed consolidated statements.
(c) Revenue Recognition:
Revenue is recorded when (i) services are rendered, (ii) the Company has signed charter agreement or
other evidence of an arrangement, (iii) the price is fixed or determinable and (iv) collection is reasonably assured. Revenue is generated from the time charter of vessels.
Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight-line basis as the average revenue over
the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers disposal for a period of time during which the charterer uses the vessel in return for the payment of a
specified daily hire rate. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.
Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterers average daily income (calculated on a quarterly,
half-yearly or annually basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit share elements, these are
accounted for or when such revenue becomes determinable.
Revenues are recorded net of address commissions. Address commissions represent a discount
provided directly to the charterers based on a fixed percentage of the agreed upon charter. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for
the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Pooling arrangements
For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The
amount allocated to each pool participant vessel, including the Companys vessels, is determined in accordance with an agreed-upon formula, which is determined by margins awarded to each vessel in the pool based on the vessels age, design
and other performance characteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably
assured.
As of March 31, 2017, the entities included in these condensed consolidated financial statements were:
|
|
|
|
|
|
|
|
|
Company name
|
|
Vessel name
|
|
Country of
incorporation
|
|
2017
|
|
2016
|
Navios Maritime Midstream Operating LLC
|
|
N/A
|
|
Marshall Islands
|
|
1/1-3/31
|
|
1/1-3/31
|
Navios Maritime Midstream Partners L.P.
|
|
N/A
|
|
Marshall Islands
|
|
1/1-3/31
|
|
1/1-3/31
|
Navios Maritime Midstream Partners Finance (US) Inc.
|
|
N/A
|
|
Delaware
|
|
1/1-3/31
|
|
1/1-3/31
|
Shinyo Kannika Limited
|
|
Shinyo Kannika
|
|
Hong Kong
|
|
1/1-3/31
|
|
1/1-3/31
|
Shinyo Ocean Limited
|
|
Shinyo Ocean
|
|
Hong Kong
|
|
1/1-3/31
|
|
1/1-3/31
|
Shinyo Saowalak Limited
|
|
Shinyo Saowalak
|
|
British Virgin Is.
|
|
1/1-3/31
|
|
1/1-3/31
|
Shinyo Kieran Limited
|
|
Shinyo Kieran
|
|
British Virgin Is.
|
|
1/1-3/31
|
|
1/1-3/31
|
Shinyo Dream Limited
|
|
C. Dream
|
|
Hong Kong
|
|
1/1-3/31
|
|
1/1-3/31
|
Sikinos Shipping Corporation
|
|
Nave Celeste
|
|
Marshall Islands
|
|
1/1-3/31
|
|
1/1-3/31
|
F-7
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
Recent Accounting Pronouncements
In January 2017, the FASB issued Accounting Standard Update (ASU)
2017-01,
Business
Combinations to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisition (or disposals) of assets or businesses. Under current
implementation guidance the existence of an integrated set of acquired activities (inputs and processes that generate outputs) constitutes an acquisition of business. This ASU provides a screen to determine when a set of assets and activities does
not constitute a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a
business. This update is effective for public entities with reporting periods beginning after December 15, 2017, including interim periods within those years. The amendments of this ASU should be applied prospectively on or after the effective
date. Early adoption is permitted, including adoption in an interim period (i) for transactions for which the acquisition date occurs before the issuance date or effective date of the ASU, only when the transaction has not been reported in
financial statements that have been issued or made available for issuance and (ii) for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or effective date of the
amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company is currently assessing the impact that adopting this new accounting guidance will have on its
consolidated financial statements.
In January 2017, the FASB issued ASU
2017-03
Accounting Changes and
Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323). The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SEC guidance that
specifically relates to our Consolidated Financial Statements was from the September 2016 meeting, where the SEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as
well as any amendments issued prior to adoption, on revenue (ASU
2014-09),
leases (ASU
2016-02)
and credit losses on financial instruments (ASU
2016-13)
in accordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases
where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition
paragraphs of each of the three new standards. The adoption of this new accounting guidance did not have a material effect on the Companys Consolidated Financial Statements.
In August 2016, the FASB issued
ASU 2016-15, Statement
of Cash Flows: Classification of Certain Cash
Receipts and Cash Payments. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for public business entities for fiscal years beginning after
December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial
statements.
In February 2016, the FASB issued ASU
No. 2016-02,
Leases (Topic 842). ASU
2016-02
will apply to both types of leases capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the
balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU
2016-02
is effective for fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnotes disclosures.
In May 2014, the FASB issued ASU
2014-09
Revenue from Contracts with Customers clarifying the method used
to determine the timing and requirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract, the transaction price and allocate the price to specific
performance obligations to recognize the revenue when the obligation is completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and
cash flow arising from contracts. The new accounting guidance was originally effective for interim and annual periods beginning after December 15, 2016. On July 9, 2015, the FASB finalized a
one-year
deferral of the effective date for the new revenue standard. The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The adoption of the new standard is not
expected to have a material impact on the Companys results of operations, financial position or cash flows.
F-8
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
NOTE 3: CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Cash at banks
|
|
$
|
35,253
|
|
|
$
|
49,787
|
|
Short-term deposits
|
|
|
3,009
|
|
|
|
3,004
|
|
Total cash and cash equivalents
|
|
$
|
38,262
|
|
|
$
|
52,791
|
|
The bank accounts are legally owned by the entities referenced in Note 1.
Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of
non-performance
by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits. The Company also minimizes exposure to credit risk by dealing
with a diversified group of major financial institutions.
Restricted cash of $10,000 as of March 31, 2017 ($0 for December 31, 2016) is held as
per certain provisions of Navios Midstreams credit facility.
NOTE 4: VESSELS, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
Balance at December 31, 2016
|
|
$
|
487,640
|
|
|
$
|
(109,196
|
)
|
|
$
|
378,444
|
|
Additions
|
|
|
|
|
|
|
(5,556
|
)
|
|
|
(5,556
|
)
|
Balance at March 31, 2017
|
|
$
|
487,640
|
|
|
$
|
(114,752
|
)
|
|
$
|
372,888
|
|
NOTE 5: INTANGIBLE ASSETS
Intangible assets as of March 31, 2017 and December 31, 2016 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Favorable lease terms
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net Book
Value
|
|
Balance at December 31, 2016
|
|
$
|
44,877
|
|
|
$
|
(19,713
|
)
|
|
$
|
25,164
|
|
Additions
|
|
|
|
|
|
|
(737
|
)
|
|
|
(737
|
)
|
Balance at March 31, 2017
|
|
$
|
44,877
|
|
|
$
|
(20,450
|
)
|
|
$
|
24,427
|
|
Amortization expense of favorable lease terms for the three month period ended March 31, 2017 and 2016 is presented in
the following table:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
March 31,
2016
|
|
Favorable lease terms
charter-out
|
|
|
(737
|
)
|
|
|
(821
|
)
|
Total
|
|
$
|
(737
|
)
|
|
$
|
(821
|
)
|
F-9
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
The aggregate amortizations of intangible assets will be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Within
One
Year
|
|
|
Year
Two
|
|
|
Year
Three
|
|
|
Year
Four
|
|
|
Year
Five
|
|
|
Thereafter
|
|
|
Total
|
|
Favorable lease terms
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(10,371
|
)
|
|
$
|
(24,426
|
)
|
Total
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(2,811
|
)
|
|
$
|
(10,371
|
)
|
|
$
|
(24,426
|
)
|
Intangible assets subject to amortization are amortized using the straight-line method over their estimated useful lives to
their estimated residual value of zero. Intangible assets are amortized over the contract periods, which ranged from 6.34 to 15.00 years at inception.
NOTE 6: LONG-TERM DEBT
Long-term debt consisted of the
following:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Term Loan B
|
|
|
201,412
|
|
|
|
201,925
|
|
Less deferred finance costs, net
|
|
|
(3,100
|
)
|
|
|
(3,342
|
)
|
Total long term debt
|
|
|
198,312
|
|
|
|
198,583
|
|
Less unamortized discount
|
|
|
(1,305
|
)
|
|
|
(1,407
|
)
|
Less current portion, net of deferred finance cost
|
|
|
(665
|
)
|
|
|
(661
|
)
|
Total Long Term Debt, net of current portion and net of deferred finance costs
|
|
$
|
196,342
|
|
|
$
|
196,515
|
|
Term Loan B:
On June 18, 2015, Navios Midstream and Navios Maritime Midstream Partners Finance (US) Inc.
(Navios Finance), as
co-borrowers,
completed the issuance of the $205,000 Term Loan B (the Term Loan B). The Term Loan B is set to mature on June 18, 2020 and is repayable in equal
quarterly installments of 0.25% of the initial principal amount of the Term Loan B, beginning on September 18, 2015, with a final payment of the aggregate principal amount of the Term Loan B, plus accrued and unpaid interest, due on the
maturity. The Term Loan B bears interest at LIBOR plus 4.50% per annum.
The Term Loan B requires maintenance of a loan to value ratio of no greater
than 0.85 to 1.0 and a minimum interest coverage ratio of at least 3.75 to 1.0, and other restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. The Term Loan B also
provides for excess cash flow prepayments and customary events of default.
Amounts drawn under the facilities are secured by first preferred mortgages on
Navios Midstreams vessels and other collateral and are guaranteed by each vessel-owning subsidiary.
As of March 31, 2017, Navios Midstream was
in compliance with the covenants set forth in the Term Loan B.
As of March 31, 2017, a balance of $201,412 was outstanding under the Term Loan B.
The maturity table below reflects the principal payments of credit facilities outstanding as of March 31, 2017 for the next four years and
thereafter are based on the repayment schedule of the respective loan facilities (as described above).
The weighted average interest rate as of
March 31, 2017 and 2016 was 5.52% and 5.50%, respectively.
|
|
|
|
|
|
|
March 31,
2017
|
|
Long-Term Debt Obligations:
|
|
|
|
|
Year
|
|
|
|
|
March 31, 2018
|
|
$
|
2,050
|
|
March 31, 2019
|
|
|
2,050
|
|
March 31, 2020
|
|
|
2,050
|
|
March 31, 2021
|
|
|
195,262
|
|
Total
|
|
$
|
201,412
|
|
F-10
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following
methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents:
The
carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because of the short maturity of these investments.
Term Loan B facility:
The fair value of the Companys debt is estimated based on currently available debt with similar contract terms,
interest rate and remaining maturities, as well as taking into account our creditworthiness.
The fair value hierarchy is explained as
follows:
Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to
access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than quoted prices included in
Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs
that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2017 or December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
Book Value
|
|
|
Fair Value
|
|
|
Book Value
|
|
|
Fair Value
|
|
Cash and cash equivalents
|
|
$
|
38,262
|
|
|
$
|
38,262
|
|
|
$
|
52,791
|
|
|
$
|
52,791
|
|
Restricted cash
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
$
|
|
|
|
$
|
|
|
Long-term debt
|
|
$
|
198,312
|
|
|
$
|
201,412
|
|
|
$
|
198,583
|
|
|
$
|
198,139
|
|
Due from related parties
|
|
$
|
11,368
|
|
|
$
|
11,368
|
|
|
$
|
4,864
|
|
|
$
|
4,864
|
|
Fair Value Measurements
The estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair
value hierarchy, are as follows:
Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that
we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than
quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2017 or December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at
March 31, 2017 Using
|
|
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
Cash and cash equivalents
|
|
$
|
38,262
|
|
|
$
|
38,262
|
|
|
$
|
|
|
|
$
|
|
|
Restricted cash
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
$
|
|
|
|
$
|
|
|
Long-term debt
|
|
$
|
201,412
|
|
|
$
|
|
|
|
$
|
201,412
|
|
|
$
|
|
|
Due from related parties
|
|
$
|
11,368
|
|
|
$
|
11,368
|
|
|
$
|
|
|
|
$
|
|
|
F-11
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at
December 31, 2016 Using
|
|
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
Cash and cash equivalents
|
|
$
|
52,791
|
|
|
$
|
52,791
|
|
|
$
|
|
|
|
$
|
|
|
Long-term debt
|
|
$
|
198,139
|
|
|
$
|
|
|
|
$
|
198,139
|
|
|
$
|
|
|
Due from related parties
|
|
$
|
4,864
|
|
|
$
|
4,864
|
|
|
$
|
|
|
|
$
|
|
|
NOTE 8: TRANSACTIONS WITH RELATED PARTIES
Management fees:
On November 18, 2014, the Company entered into a Management Agreement with the Manager, a wholly-owned subsidiary of Navios
Holdings, pursuant to which the Manager provides commercial and technical management services to Navios Midstreams vessels for a daily fee of $9.5 per VLCC tanker vessel that was originally fixed for the first two years.
In October 2016, Navios Midstream amended its existing Management Agreement with the Manager to extend the fixed fee period for commercial and technical
management services of its fleet, until December 31, 2018 at the current rate of $9.5 per day per VLCC. Dry docking expenses are reimbursed at cost for all vessels.
Total management fees for each of the three month periods ended March 31, 2017 and 2016 amounted to $5,130 and $5,187, respectively.
General and administrative expenses:
On November 18, 2014, Navios Midstream entered into the Administrative Services Agreement with the Manager,
expiring on November 18, 2019, pursuant to which the Manager provides certain administrative management services to Navios Midstream which include: bookkeeping, audit and accounting services, legal and insurance services, administrative and
clerical services, banking and financial services, advisory services, client and investor relations and other services. The Manager is reimbursed for reasonable costs and expenses.
For each of the three month periods ended March 31, 2017 and 2016, the expense arising from the administrative services rendered by the Manager to the
Companys vessels amounted to $375.
Balances due from related parties:
Balances due from related parties relate to amounts from Navios
Acquisition and its subsidiaries.
Amounts due from related parties as of March 31, 2017 and as of December 31, 2016, were $11,368 and $4,864,
respectively, which mainly related to payments of management fees and other expenses, including dry docking expenses.
Omnibus Agreement:
On
November 18, 2014, Navios Midstream entered into an omnibus agreement, with Navios Acquisition, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios
Partners and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years. The omnibus agreement
contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.
Under the omnibus agreement, Navios Midstream and its subsidiaries granted to Navios Acquisition a right of first offer on any proposed sale, transfer or
other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and related charters owned or acquired by Navios Midstream. Likewise, Navios Acquisition granted a similar right of
first offer to Navios Midstream for any of the VLCCs, crude oil tanker, refined petroleum product tanker, LPG tanker or chemical tanker under charter for five or more years it might own. These rights of first offer will not apply to a (a) sale,
transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party or (b) merger with or into, or sale of substantially all of the assets to, an
unaffiliated third-party.
Backstop Agreements:
On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios
Midstream. In accordance with the terms of the backstop agreements, Navios Acquisition has provided a backstop commitment at a net rate of $35.0 per day for the Nave Celeste, $38.4 per day for the Shinyo Ocean and $38.0 per day for the Shinyo
Kannika. The backstop rates apply for a
two-year
period as of the redelivery of each of the vessels from its original charterer, if the actual rates achieved are below the agreed backstop rates for each
of the vessels. For the three month period ended March 31, 2017, backstop revenue amounted to $1,155 ($0 million for the same period in 2016).
F-12
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
General Partner Option Agreement:
Navios Holdings has a
ten-year
option to purchase a minimum of 25% of the general partner interest held by the general partner, the incentive distribution rights held by the general partner and/or the membership interests in the
general partner from Navios Acquisition, each at fair market value. The option expires on November 18, 2024.
Option Vessels:
Navios
Midstream has options expiring on November 18, 2018 to acquire the Buena Suerte, the Nave Neutrino and the Nave Electron from Navios Acquisition.
NOTE 9: COMMITMENTS AND CONTINGENCIES
The Company
is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions are recognized in the financial statements for all such proceedings where the Company believes that a liability may be probable, and
for which the amounts are reasonably estimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of these matters individually and in aggregate will not
materially affect the Companys financial position, results of operations or liquidity.
NOTE 10: SEGMENT INFORMATION
The Company reports financial information and evaluates its operations by charter revenues. The Company does not use discrete financial information to evaluate
operating results for each type of charter. As a result, management reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment.
Company monitors operating revenue by geographic region for the Companys reportable segment. Revenue is allocated on the basis of the geographic region
in which the customer is located. Revenues from specific geographic regions which contribute over 10% of total revenue are disclosed separately. For the three month periods ended March 31, 2017 and 2016, all the revenues were derived from
customers located in Asia.
Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate
the assets of these operations to specific countries.
NOTE 11: ISSUANCE OF UNITS
On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement with the Agent, pursuant to which Navios Midstream may issue
and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25,000.
During the quarter ended March 31, 2017, Navios Midstream issued 315,846 common units and received net proceeds of $3,777. Pursuant to the issuance of
the common units, Navios Midstream issued 6,446 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were $79. As of
March 31, 2017, there were outstanding: 9,991,641 common units, 9,342,692 subordinated units, 1,592,920 subordinated Series A Units and 427,087 general partnership units. As of March 31, 2017, Navios Acquisition owned a 59.03% limited
partner interest in Navios Midstream, which included a 2.0% general partner interest.
NOTE 12: CASH DISTRIBUTIONS AND EARNINGS/ (LOSSES) PER UNIT
The partnership agreement of Navios Midstream requires that all available cash is distributed quarterly, after deducting expenses, including estimated
maintenance and replacement capital expenditures and reserves. Distributions may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and
regulations. The amount of the minimum quarterly distribution is $0.4125 per unit or $1.65 per unit per year and is made in the following manner:
|
|
|
First, 98% to the holders of common units and 2% to the General Partner until each common unit has received a minimum quarterly distribution of $0.4125 plus any arrearages from previous quarters;
|
|
|
|
Second, 98% to the holders of subordinated units and 2% to the General Partner until each subordinated unit has received a minimum quarterly distribution of $0.4125; and
|
|
|
|
Third, 98% to all unitholders, pro rata, and 2% to General Partner, until each unit has received an aggregate amount of $0.4744.
|
F-13
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
Thereafter there are incentive distribution rights held by the General Partner, which are analyzed as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marginal Percentage
Interest in Distributions
|
|
|
Total Quarterly
Distribution
Total Amount
|
|
|
Common
and
subordinated
Unitholders
|
|
|
General
Partner
|
|
|
Holders of
IDRs
|
|
Minimum Quarterly Distribution
|
|
$
|
|
|
0.4125
|
|
|
|
98.0
|
%
|
|
|
2.0
|
%
|
|
|
0
|
%
|
First Target Distribution
|
|
up to $
|
|
|
0.4744
|
|
|
|
98.0
|
%
|
|
|
2.0
|
%
|
|
|
0
|
%
|
Second Target Distribution
|
|
above $
|
|
|
0.4744
|
|
|
|
85.0
|
%
|
|
|
2.0
|
%
|
|
|
13.0
|
%
|
|
|
up to $
|
|
|
0.5156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Target Distribution
|
|
above $
|
|
|
0.5156
|
|
|
|
75.0
|
%
|
|
|
2.0
|
%
|
|
|
23.0
|
%
|
|
|
up to $
|
|
|
0.6188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
above $
|
|
|
0.6188
|
|
|
|
50.0
|
%
|
|
|
2.0
|
%
|
|
|
48.0
|
%
|
On January 23, 2017, the Board of Directors authorized its quarterly cash distribution for the three month period ended
December 31, 2016 of $0.4225 per unit. The distribution was paid on February 14, 2017 to all holders of record of common, subordinated, subordinated Series A units and general partner units on February 9, 2017. The aggregate amount of
the distribution paid was $9,019.
For the period subsequent to the IPO, Navios Midstream calculates earnings per unit by allocating reported net income
for each period to each class of units based on the distribution waterfall for available cash specified in Navios Midstreams partnership agreement, net of the unallocated earnings. Basic earnings per unit are determined by dividing net income
by the weighted average number of units outstanding during the period. Basic and diluted net earnings per unit are the same because the Company does not have any potentially dilutive units outstanding for the period presented.
In determining earnings per unit, the net loss for the period prior to the IPO, has been allocated to the general partner.
Net loss per unit undistributed is determined by taking the distributions in excess of net income and allocating between common units, subordinated units and
general partner units on a
98%-2%
basis.
The calculations of the basic and diluted earnings per unit are
presented below.
|
|
|
|
|
|
|
|
|
|
|
Three Month
Period ended
March 31, 2017
($ 000)
(unaudited)
|
|
|
Three Month
Period ended
March 31, 2016
($ 000)
(unaudited)
|
|
Net income attributable to Navios Maritime Midstream Partners L.P. subsequent to initial public
offering and limited partners interest in net income:
|
|
$
|
4,502
|
|
|
$
|
7,495
|
|
Earnings attributable to:
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
$
|
2,108
|
|
|
$
|
3,384
|
|
Subordinated unit holders Series A
|
|
$
|
336
|
|
|
$
|
577
|
|
Subordinated unit holders
|
|
$
|
1,971
|
|
|
$
|
3,384
|
|
General Partner
|
|
$
|
87
|
|
|
$
|
150
|
|
Weighted average units outstanding (basic and diluted)
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
|
9,863,461
|
|
|
|
9,342,692
|
|
Subordinated unit holders Series A
|
|
|
1,592,920
|
|
|
|
1,592,920
|
|
Subordinated unit holders
|
|
|
9,342,692
|
|
|
|
9,342,692
|
|
General Partner
|
|
|
423,363
|
|
|
|
413,843
|
|
Earnings per unit (basic and diluted):
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
$
|
0.22
|
|
|
$
|
0.36
|
|
Subordinated unit holders Series A
|
|
$
|
0.21
|
|
|
$
|
0.36
|
|
Subordinated unit holders
|
|
$
|
0.19
|
|
|
$
|
0.36
|
|
General Partner
|
|
$
|
0.21
|
|
|
$
|
0.36
|
|
Earnings per unit - distributed (basic and diluted):
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
$
|
0.43
|
|
|
$
|
0.42
|
|
Subordinated unit holders Series A
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
Subordinated unit holders
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
General Partner
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
(Losses) per unit - undistributed (basic and diluted):
|
|
|
|
|
|
|
|
|
Common unit holders
|
|
$
|
(0.21
|
)
|
|
$
|
(0.06
|
)
|
Subordinated unit holders Series A
|
|
$
|
(0.21
|
)
|
|
$
|
(0.06
|
)
|
Subordinated unit holders
|
|
$
|
(0.23
|
)
|
|
$
|
(0.06
|
)
|
General Partner
|
|
$
|
(0.21
|
)
|
|
$
|
(0.06
|
)
|
F-14
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
NOTE 13: INCOME TAXES
Marshall Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws of Marshall Islands, British
Virgin Islands, and Hong Kong, of the companies incorporation and vessels registration, the companies are subject to registration and tonnage taxes which have been included in the daily management fee.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having
established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessels tonnage. The payment of said duties exhausts the tax liability of the foreign ship owning company and
the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.
Pursuant to
Section 883 of the Internal Revenue Code of the United States (the Code), U.S. source income from the international operation of ships is generally exempt from U.S. income tax if the company operating the ships meets certain
incorporation and ownership requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. All
of the Companys vessel- owning subsidiaries satisfy these initial criteria. In addition, these companies must meet an ownership test. Subject to proposed regulations becoming finalized in their current form, the management of Navios
Acquisition believes by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like Navios Acquisition, the second criterion can also be satisfied based on the trading
volume and ownership of the Companys shares, but no assurance can be given that this will remain so in the future.
NOTE 14: SUBSEQUENT
EVENTS
On April 24, 2017, the Board of Directors of Navios Midstream authorized its quarterly cash distribution for the three month period ended
March 31, 2017 of $0.4225 per unit. The distribution is payable on May 11, 2017 to all holders of record of common, subordinated, subordinated Series A units and general partner units on May 5, 2017. The aggregate amount of the
declared distribution is anticipated to be $9,022.
F-15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
NAVIOS MARITIME MIDSTREAM PARTNERS L.P.
|
|
|
By:
|
|
/s/ Angeliki Frangou
|
|
|
Angeliki Frangou
|
|
|
Chief Executive Officer
|
Date: April 28, 2017
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