TEUFF Box Ships Inc (CE)

ATHENS, Greece, May 26, 2015 /PRNewswire/ -- Box Ships Inc. (NYSE: TEU) (the "Company"), a global shipping company specializing in the seaborne transportation of containers, announced today its results for the first quarter ended March 31, 2015.

Mr. Michael Bodouroglou, Chairman, President, Chief Executive Officer and Interim Chief Financial Officer of Box Ships Inc., commented:

"During the first quarter of 2015 and despite the lower revenues compared to the first quarter of 2014, we reported adjusted net income of $1.5 million, significantly improved compared to adjusted net income of $0.3 million recognized in the same period of 2014.

During the quarter, market fundamentals improved significantly, as illustrated also from the re-chartering of the Box Voyager and Box Emma at $10,600 and $13,500 per day, respectively, compared to the vessels' previous daily charter rates of $8,500 and $9,450 per day, respectively. As a result of the improved charter rates and lower total vessel operating expenses, our adjusted net income increased to $1.5 million, from adjusted net loss of $0.3 million recognized during the fourth quarter of 2014.

Finally, in April 2015 we also fixed the Box Queen at a gross daily rate of $13,100 and are currently in discussions to charter our OOCL vessels, upon their redelivery to us, at what we anticipate to be profitable rates, while we are also in discussions with the existing lender to extend the respective loan. We believe there is increasingly room for optimism as we expect improved rates and our financing arrangements to give us increased flexibility and liquidity until the end of 2016."

Results of Operations

Three months ended March 31, 2015 compared to three months ended March 31, 2014

During the first quarter of 2015, we operated an average of 9 vessels. Our Net Loss and Adjusted Net Income during the first quarter of 2015 were $0.3 million and $1.5 million, respectively, resulting in basic and diluted loss per share of $0.03 and basic and diluted adjusted earnings per share of $0.03. EBITDA and Adjusted EBITDA for the first quarter of 2015 were $4.9 million and $6.7 million, respectively.

During the first quarter of 2014, we operated an average of 9 vessels. Our Net Loss and Adjusted Net Income during the first quarter of 2014 was $1.5 million and $0.3 million, respectively, resulting in basic and diluted loss per share of $0.08 and basic and diluted adjusted loss per share of $0.01. EBITDA and Adjusted EBITDA for the first quarter of 2014 was $4.1 million and $5.9 million, respectively.

Net revenues

Net revenues represent charter hire earned, net of commissions. During the first quarter of 2015 and 2014, our vessels operated a total of 777 and 753 days, respectively, out of a total of 810 calendar days in both periods. During the first quarter of 2015, we had a total of 33 unscheduled off-hire days, mainly related to 23 idle days of Box Queen and 8 idle days of Box Emma. During the first quarter of 2014, we had a total of 15 unscheduled off-hire days, mainly related to 14 idle days of Box Queen, and 42 scheduled off-hire days related to the dry-dockings of Box Emma and OOCL China. Currently, all vessels in our fleet are employed under fixed rate time charters, having an average weighted remaining charter duration of 4 months (weighted by aggregate contracted charter hire). The Company reported net revenues for the first quarter of 2015 of $11.2 million, a decrease of 21% compared to $14.2 million in the first quarter of 2014. This decrease is mainly due to the re-chartering of Box Emma, CMA CGM Kingfish and CMA CGM Marlin in the first quarter of 2015 at lower rates compared to the respective quarter in 2014, which was partially offset by the scheduled off-hire days related to the dry-dockings of Box Emma and OOCL China during the first quarter of 2014. More specifically, the Box Emma earned an average daily rate of $10,076 during the first quarter of 2015, compared to $28,500 per day that the vessel was earning during the first quarter of 2014; the CMA CGM Kingfish and CMA CGM Marlin each earned a daily rate of $9,500 during the first quarter of 2015, compared to an average daily rate of approximately $20,000 per day that each of these vessels was earning during the first quarter of 2014. Our net revenues are also net of the amortization of above/below market time charters, which decreased our revenues and net income for the first quarter of 2015 and 2014 by $1.3 million and $0.9 million, respectively, or $0.04 and $0.04 per common share, respectively. Our average time charter equivalent rate, or TCE rate, for the first quarter of 2015 was $13,713 per vessel per day, which was 25% below our average TCE rate of $18,184 per vessel per day during the first quarter of 2014, mainly due to the reasons outlined above. Our adjusted TCE rate was $15,364 per vessel per day in the first quarter of 2015, 21% lower than our adjusted TCE of $19,434 for the first quarter of 2014. 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 first quarter of 2015 and 2014 amounted to $0.6 million and $0.5 million, respectively. Voyage expenses for the first quarter of 2015 included sundry voyage expenses of $0.2 million, war risk insurance costs of $0.2 million and bunkers of $0.2 million, whereas voyage expenses for the first quarter of 2014 included approximately $0.2 million, relating to war risk insurance costs and $0.2 million, relating to bunkers consumed by the Box Emma and OOCL China in voyages to and from the dry-docks.  

Vessels operating expenses 

Vessels operating expenses including the amortization of other intangible assets for the first quarter of 2015 and 2014 amounted to $4.1 million and $4.9 million, respectively, or $3.8 million and $4.6 million, respectively, on an adjusted basis to exclude the amortization of other intangible assets. On average, our vessels' operating expenses for the first quarter of 2015 amounted to $5,039 per vessel per day, or $4,655 per vessel per day on an adjusted basis, compared to $6,067 per vessel per day, in the first quarter of 2014, or $5,746 per vessel per day on an adjusted basis. The amortization of other intangible assets for each of the first quarters of 2015 and 2014 amounted to $0.3 million. The decrease is a result of continuing cost control efforts and also due to claimable expenses of approximately $0.4 million, relating to repairs and other costs incurred in the first quarter of 2014 in connection with the Box Emma.

Management fees charged by a related party

Management fees charged by Allseas Marine S.A. (our "Manager" or "Allseas") for the first quarter of 2015 and 2014 were $0.6 million and $0.7 million, or $744 (€646.99) per vessel per day, and $881 (€643.77) 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 first quarters of 2015 and 2014 was $3.7 million.

General and administrative expenses

General and administrative ("G&A") expenses for the first quarter of 2015 and 2014 amounted to $1.1 million and $1.6 million, or $1,365 and $1,995 per vessel per day, respectively. The decrease in G&A expenses is due to the decreased share-based compensation, which amounted to $0.2 million for the first quarter of 2015 compared to $0.6 million in the year-ago period.

Interest and finance costs

Interest and finance costs amounted to $1.4 million and $1.9 million for the first quarter of 2015 and 2014, respectively. This decrease in interest and finance costs is due to the decrease in our average borrowings outstanding period over period.

Net cash from Operating Activities

Net cash from Operating Activities for the three months ended March 31, 2015 was $4.5 million. Our vessels generated positive cash flows from revenues, net of commissions, of $12.6 million, while we paid $8.1 million for expenses, of which $1.4 million relates to the payment of interest on our bank loans.

Net cash from Operating Activities for the three months ended March 31, 2014 was $3.8 million. Our vessels generated positive cash flows from revenues, net of commissions, of $13.0 million, while we paid $9.2 million for expenses, of which $1.6 million related to the payment of interest on our bank loans.

Net cash used in Financing Activities

Net cash used in Financing Activities for the three months ended March 31, 2015, was $3.7 million. During the three months ended March 31, 2015, we repaid $3.2 million of our debt and made cash payments to our preferred shareholders of $0.5 million.

Net cash used in Financing Activities for the three months ended March 31, 2014, was $6.3 million. During the first quarter of 2014, we repaid $5.7 million of our debt, paid financing and offering costs of $0.1 million and made cash payments to our preferred shareholders of $0.5 million.

Liquidity:

As of March 31, 2015, our cash and restricted cash (current and non-current) amounted to $15.4 million in aggregate, of which $8.0 million is considered restricted for minimum liquidity purposes under our loan agreements. As of March 31, 2015, we had total outstanding indebtedness of $131.8 million, of which $21.0 million is scheduled to be repaid in the forthcoming 12-month period. $3.2 million has been repaid as of the date of this release. Furthermore, as of March 31, 2015, we were in compliance with the covenants contained in our loan agreements, as amended to give effect to waivers we were granted during 2014. As of March 31, 2015, had the waivers not been granted, we would not have been in compliance with certain of our financial covenants and security cover ratios contained in the loan agreements. The waivers are due to expire during 2015, commencing on June 29, 2015, and in accordance with U.S. GAAP, unless the waivers are extended for a period of more than one year after the balance sheet date or the loans are refinanced prior to the issuance of the consolidated financial statements, our total debt will be required to be presented as current even though we were in compliance as of March 31, 2015.

During the second quarter of 2015, the charters of our OOCL vessels expire. Specifically, the OOCL Hong Kong was redelivered from her charterer on May 26, 2015 and the OOCL China is expected to be redelivered on or about June 5, 2015. We are currently in discussions to find new charters for both vessels and in the same time, we have entered into discussions with the financing bank to extend the respective loan.

Finally, we have no borrowing capacity under our existing loan facilities and no capital commitments. We anticipate that our current financial resources, together with cash generated from operations, will be sufficient to fund the operations of our current fleet, including our working capital requirements, for the next 12 months, assuming that the debt will not be accelerated by our lenders.

Preferred Stock Payments:

On April 1, 2015, we made a cash payment of $0.5 million with respect to our Series C Preferred Shares, for the period from January 1, 2015 through March 31, 2015. As of March 31, 2015, 916,333 Series C Preferred Shares were outstanding.

Cash payments on our Series C Preferred Shares accrue cumulatively at a rate of 9.00% per annum per $25.00 stated liquidation preference per Series C Preferred Share and are payable, when, as and if declared by the Board of Directors, on January 1, April 1, July 1 and October 1 of each year. Our ability to make cash payments will be subject, among other things, to the restrictions in our loan agreements, the provisions of Marshall Islands law and other factors to be considered by our Board of Directors.

Chartering Update and Strategy:

In March 2015, the Box Voyager extended its time charter with CNC for a further period of 12 months, which commenced on March 31, 2015, at a daily gross charter rate of $10,600.

In April 2015, the Box Queen entered into a time charter with CMA CGM, for a period of 70 to 120 days, at a gross daily charter rate of $13,100.

Pursuant to our chartering strategy, we focus on short- to medium-term time charters with staggered maturities, which provide us with the benefit of stable cash flows from a diversified portfolio of charterers, while preserving the flexibility to capitalize on potentially rising rates when the current time charters expire. Based on the earliest redelivery dates, the Company has secured under such contracts 44% and 6% of its fleet capacity for the remainder of 2015 and 2016, respectively. For future updates on the employment of our vessels, please visit the employment section of our website at www.box-ships.com/fleet-employment.php. The information contained on the Company's website does not constitute part of this press release.   

Fleet List:

The following table provides additional information about our fleet as of May 26, 2015:

Conference Call and Webcast details:

The Company's management will host a conference call to discuss its results for the first quarter of 2015, on May 27, 2015 at 9:00 am ET.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1-888-348-2672 (USA) or +1-412-902-4232 (international).

A replay of the conference call will be available for seven days and can be accessed by dialing +1-877-870-5176 (domestic) and +1-858-384-5517 (international) and using passcode 10066165.

There will also be a simultaneous live webcast over the Internet, through the Company's website (www.box-ships.com). Participants in the live webcast should register on the website approximately 15 minutes prior to the start of the webcast.

About Box Ships Inc.:

Box Ships Inc. is an Athens, Greece-based international shipping company specializing in the transportation of containers. The Company's current fleet consists of nine containerships with a total carrying capacity of 43,925 TEU and a TEU weighted average age of 10.3 years. The Company's common shares and Series C Preferred Shares trade on the New York Stock Exchange under the symbols "TEU" and "TEUPRC", respectively.

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for container shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

- Tables Follow –

Reconciliation of U.S. GAAP Financial Information to Non-GAAP measures

Footnotes:

Footnotes:

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SOURCE Box Ships Inc.