ATHENS, Greece, /PRNewswire/ -- Box Ships Inc. (NYSE: TEU) (the "Company"), a global shipping company specializing in the seaborne transportation of containers, announced on Nov. 5, 2014 its results for the third quarter and nine months ended September 30, 2014.
Three Months Nine Months Ended
Ended September September 30,
30,
---------------- ------------------
Financial Highlights 2013 2014 2013 2014
(Expressed in thousands
of U.S. Dollars, except
per share data)
------------------------
Time charter revenues $18,258 $11,767 $54,056 $39,149
Amortization of above/
below market time
charters 1,424 1,155 4,035 3,597
---------------------- ----- ----- ----- -----
Time charter revenues,
adjusted(1) $19,682 $12,922 $58,091 $42,746
---------------------- ------- ------- ------- -------
EBITDA(2) $10,711 $11,239 $29,931 $21,589
Adjusted EBITDA(2) $12,910 $6,306 $36,257 $20,136
Net Income $4,843 $5,649 $12,291 $4,805
Adjusted Net Income(2) $7,042 $716 $18,617 $3,352
Earnings per common
share (EPS), basic $0.10 $0.17 $0.37 $0.11
Earnings per common
share (EPS), diluted $0.10 $0.17 $0.36 $0.11
Adjusted Earnings per
common share, basic(2) $0.27 $0.01 $0.73 $0.06
Adjusted Earnings per
common share,
diluted(2) $0.26 $0.01 $0.65 $0.06
--------------------- ----- ----- ----- -----
1 Time charter revenues, adjusted,
is not a recognized measurement
under generally accepted accounting
principles in the United States of
America ("U.S. GAAP" or "GAAP"). We
believe that the presentation of
Time charter revenues, adjusted is
useful to investors because it
presents the charter revenues
recognized in the relevant period
based on the contracted charter
rates, excluding the amortization
of above/below market time
charters attached to vessels
acquired. Please refer to the
definition and reconciliation of
this measurement to the most
directly comparable financial
measure calculated and presented in
accordance with U.S. GAAP at the
back of this release.
(2) EBITDA, Adjusted EBITDA,
Adjusted Net Income and Adjusted
Earnings /(Loss) per common share
("Adjusted EPS") are not recognized
measurements under GAAP. Please
refer to the definitions and
reconciliation of these
measurements to the most directly
comparable financial measures
calculated and presented in
accordance with U.S. GAAP at the
back of this release.
Mr. Michael Bodouroglou, Chairman, President and Chief Executive Officer of Box Ships Inc., commented:
"During the third quarter, we reported adjusted revenues of $12.9 million, down 34% from $19.7 million in the third quarter of 2013 due to the lower time charter rates our vessels earned year over year, and reported a net income of $5.6 million, or $0.17 per share. Our adjusted net income decreased to $716 thousand in the third quarter of 2014 from $7.0 million in the prior year period.
"Since early last year, we have been working with our lenders to ensure the liquidity and the flexibility of the Company during this continued downturn. In that respect, we have recently agreed with two of our lenders to waive certain key covenants and/or significantly reduce our quarterly debt amortization profile until the second quarter of 2016, thereby reducing our cash flow breakeven and easing covenant compliance going forward. This leaves only one remaining lender we have yet to reach an agreement with. We are in continued discussions with this lender to modify our debt amortization profile and waive certain covenants, which have lasted longer than expected. Although we still believe we will reach an agreement, we cannot be certain it will occur. In any case, we believe Box Ships is well positioned to weather a low charter rate environment until charter rates improve as expected into 2015."
Results of Operations
Three months ended September 30, 2014 compared to three months ended September 30, 2013
During the third quarter of 2014, we operated an average of 9 vessels. Our Net Income and Adjusted Net Income during the third quarter of 2014 was $5.6 million and $0.7 million, respectively, resulting in basic and diluted earnings per share of $0.17 and basic and diluted adjusted earnings per share of $0.01. EBITDA and Adjusted EBITDA for the third quarter of 2014 was $11.2 million and $6.3 million, respectively.
During the third quarter of 2013, we operated an average of 9 vessels. Our Net Income and Adjusted Net Income during the third quarter of 2013 was $4.8 million and $7.0 million, respectively, resulting in basic earnings per share of $0.10 and basic adjusted earnings per share of $0.27. EBITDA and Adjusted EBITDA for the third quarter of 2013 was $10.7 million and $12.9 million, respectively.
Net revenues
Net revenues represent charter hire earned, net of commissions. During the third quarter of 2014 and 2013, our vessels operated a total of 827 and 828 days, respectively, out of a total of 828 calendar days in both periods. Currently, all vessels in our fleet are employed under fixed rate time charters, having an average weighted remaining charter duration of 9 months (weighted by aggregate contracted charter hire). The Company reported net revenues for the third quarter of 2014 of $11.5 million, a decrease of 36% compared to $17.9 million in the third quarter of 2013. This decrease is mainly due to the re-chartering of the Box Queen in January 2014 at a daily rate of $6,100, compared to $28,000 per day that the vessel was earning during the third quarter of 2013, the re-chartering of each of the CMA CGM Kingfish and CMA CGM Marlin in March 2014 at a daily rate of $7,000 and the extension of their charters in September 2014 at a daily rate of $9,500, compared to $23,000 per day that each of these vessels was earning during the third quarter of 2013 and the re-chartering of the MSC Emma in July 2014 at a daily rate of $9,450, compared to $28,500 per day that the vessel was earning during the third quarter of 2013. Our net revenues are also net of the amortization of above/below market time charters, which decreased our revenues and net income for the third quarter of 2014 and 2013 by $1.2 million and $1.4 million, respectively, or $0.04 and $0.06 per common share, respectively. Our average time charter equivalent rate, or TCE rate, for the third quarter of 2014 was $13,352 per vessel per day, which was 36% below our average TCE rate of $20,894 per vessel per day during the third quarter of 2013, mainly due to the reasons outlined above. Our adjusted TCE rate was $14,748 per vessel per day in the third quarter of 2014, 35% lower than our adjusted TCE of $22,613 for the third quarter of 2013. TCE rate is not a recognized measurement under GAAP. Please see the table at the back of this release for a reconciliation of TCE rates to time charter revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Voyage expenses
Voyage expenses for the third quarter of 2014 and 2013 amounted to $0.4 million and $0.6 million, respectively. Voyage expenses for the third quarter of 2014 related mainly to war risk insurance costs, whereas voyage expenses for the third quarter of 2013 included approximately $0.3 million, relating to war risk insurance costs and $0.3 million, relating to other crew costs reimbursable by the charterers.
Vessels operating expenses
Vessels operating expenses including the amortization of other intangible assets for each of the third quarters of 2014 and 2013 amounted to $4.3 million, or $4.0 million, on an adjusted basis to exclude the amortization of other intangible assets. On average, our vessels' operating expenses for the third quarter of 2014 were relatively unchanged year over year at $5,224 per vessel per day, or $4,903 per vessel per day on an adjusted basis, compared to $5,197 per vessel per day, in the third quarter of 2013, or $4,876 per vessel per day on an adjusted basis. The amortization of other intangible assets for each of the third quarters of 2014 and 2013 amounted to $0.3 million.
Management fees charged by a related party
Management fees charged by Allseas Marine S.A. (our "Manager" or "Allseas") for each of the third quarters of 2014 and 2013 were $0.7 million, or $867 (EUR646.99) per vessel per day, and $847 (EUR643.77) per vessel per day, respectively. Management fees charged by a related party represent fees for management and technical services in accordance with our management agreements and are adjusted annually in accordance with the official Eurozone inflation rate. This fee is charged on a daily basis per vessel and is affected by the number of vessels in our fleet, the number of calendar days during the period, the official Eurozone inflation rate and the U.S. Dollar/Euro exchange rate at the beginning of each month.
Depreciation
Depreciation for our fleet for each of the third quarters of 2014 and 2013 was $3.8 million.
General and administrative expenses
General and administrative ("G&A") expenses for each of the third quarters of 2014 and 2013 were $1.5 million, or $1,810 and $1,849 per vessel per day, respectively.
Interest and finance costs
Interest and finance costs amounted to $1.8 million and $2.1 million for the third quarter of 2014 and 2013, respectively. This decrease in interest and finance costs is due to the decrease in our average borrowings outstanding period over period.
Gain from debt extinguishment
Following the early repayment of our loan with Commerzbank AG in July 2014, we recognized a gain of $6.4 million from debt extinguishment.
Fair value change of warrants
During the third quarter of 2014, we recognized a gain of $0.5 million, resulting from the valuation of the warrants issued in April 2014 and classified as a liability.
