Box Ships Inc. Reports Financial Results For The Fourth Quarter And Year Ended December 31, 2014

ATHENS, Greece, March 4, 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 fourth quarter and year ended December 31, 2014.

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

"During the fourth quarter of 2014, we successfully completed the exercise of amending our loan agreements, significantly improving our liquidity profile over the next two years, even in weak market conditions. During the second half of 2014, we have entered into agreements with several of our lenders that result in a reduction of our debt amortization over the next two years by $16.5 million and also removed several restrictive covenants and reduced our minimum liquidity requirements so as to give us additional flexibility in today's challenging market. During the second quarter of 2015, the charters of our two OOCL vessels expire and their loan matures. Currently, we are exploring every possible scenario and, depending on the prevailing market conditions later this year, we may extend the charters and re-finance the loan accordingly.    

2014 was the first year with a balanced market since 2008 and the second highest year in terms of tonnage being scrapped. There is an upward trend in time charter rates across all segments, the idle fleet remains at very low levels and there are no newbuilding slots before 2017. We believe, there are, therefore, several economic factors pointing towards a further rebound in the market that should help increase asset values and improve charter rates further. This is exemplified in the recent fixture we concluded with the MSC Emma for one year at $13,500 per day. The Company has set the groundwork to benefit from these improved market conditions and approaches 2015 with cautious optimism."

Results of Operations

Three months ended December 31, 2014 compared to three months ended December 31, 2013

During the fourth quarter of 2014, we operated an average of 9 vessels. Our Net Loss and Adjusted Net Loss during the fourth quarter of 2014 were $2.2 million and $0.3 million, respectively, resulting in basic and diluted loss per share of $0.09 and basic and diluted adjusted loss per share of $0.03. EBITDA and Adjusted EBITDA for the fourth quarter of 2014 were $3.2 million and $5.1 million, respectively.

During the fourth quarter of 2013, we operated an average of 9 vessels. Our Net Income and Adjusted Net Income during the fourth quarter of 2013 were $3.0 million and $5.2 million, respectively, resulting in basic and diluted earnings per share of $0.10 and basic and diluted adjusted earnings per share of $0.19. EBITDA and Adjusted EBITDA for the fourth quarter of 2013 were $8.8 million and $11.0 million, respectively.

Net revenues

Net revenues represent charter hire earned, net of commissions. During the fourth quarter of 2014 and 2013, our vessels operated a total of 818 and 797 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 7 months (weighted by aggregate contracted charter hire). The Company reported net revenues for the fourth quarter of 2014 of $11.7 million, a decrease of 31% compared to $16.9 million in the fourth quarter of 2013. This decrease is mainly due to the re-chartering of Box Queen, CMA CGM Kingfish, CMA CGM Marlin and MSC Emma in 2014 at lower rates compared to 2013. More specifically, the Box Queen earned an average daily rate of $6,560 during the fourth quarter of 2014, compared to $28,000 per day that the vessel was earning during the fourth quarter of 2013 until its redelivery, end of November 2013; the CMA CGM Kingfish and CMA CGM Marlin each earned a daily rate of $9,500 during the fourth quarter of 2014, compared to $23,000 per day that each of these vessels was earning during the fourth quarter of 2013 and MSC Emma earned a daily rate of $9,450 during the fourth quarter of 2014, compared to $28,500 per day that the vessel was earning during the fourth 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 fourth quarter of 2014 and 2013 by $1.1 million and $1.3 million, respectively, or $0.04 and $0.05 per common share, respectively. Our average time charter equivalent rate, or TCE rate, for the fourth quarter of 2014 was $13,732 per vessel per day, which was 33% below our average TCE rate of $20,591 per vessel per day during the fourth quarter of 2013, mainly due to the reasons outlined above. Our adjusted TCE rate was $15,136 per vessel per day in the fourth quarter of 2014, 32% lower than our adjusted TCE of $22,237 for the fourth 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 each of the fourth quarters of 2014 and 2013 amounted to $0.5 million. Voyage expenses for the fourth quarter of 2014 related mainly to sundry voyage expenses of $0.2 million and war risk insurance costs of $0.2 million, whereas voyage expenses for the fourth quarter of 2013 included approximately $0.1 million, relating to war risk insurance costs and $0.2 million, relating to bunkers consumed by the Box Queen during the period the vessel was unemployed.

Vessels operating expenses 

Vessels operating expenses including the amortization of other intangible assets for the fourth quarters of 2014 and 2013 amounted to $4.6 million and $4.7 million, respectively, or $4.3 million and $4.4 million, respectively, on an adjusted basis to exclude the amortization of other intangible assets. On average, our vessels' operating expenses for the fourth quarter of 2014 were relatively unchanged year over year at $5,521 per vessel per day, or $5,199 per vessel per day on an adjusted basis, compared to $5,622 per vessel per day, in the fourth quarter of 2013, or $5,300 per vessel per day on an adjusted basis. The amortization of other intangible assets for each of the fourth 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 fourth quarters of 2014 and 2013 were $0.7 million, or $812 (€646.99) per vessel per day, and $871 (€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 fourth quarters of 2014 and 2013 was $3.8 million.

General and administrative expenses

General and administrative ("G&A") expenses for the fourth quarters of 2014 and 2013 were relatively unchanged year over year at $2.6 million and $2.7 million, or $3,123 and $3,303 per vessel per day, respectively.

Other operating (income) / expense

Other operating expenses for the fourth quarter of 2014 relate to claimable expenses for the OOCL Hong Kong, while other operating income for the fourth quarter of 2013 relates to the settlement of a hull and machinery claim for the Box Voyager, incurred in 2012.

Interest and finance costs

Interest and finance costs amounted to $1.6 million and $2.0 million for the fourth 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.

Fair value change of warrants

During the fourth quarter of 2014, we recognized a gain of $0.2 million, resulting from the valuation of the warrants issued in April 2014 and classified as a liability.

Net cash from Operating Activities

Net cash from Operating Activities for the year ended December 31, 2014 was $19.8 million. Our vessels generated positive cash flows from revenues, net of commissions, of $54.4 million, while we paid $34.6 million for expenses, of which $5.8 million relates to the payment of interest on our bank loans.

Net cash from Operating Activities for the year ended December 31, 2013 was $38.2 million. Our vessels generated positive cash flows from revenues, net of commissions, of $75.2 million, while we paid $37.0 million for expenses, of which $7.0 million related to the payment of interest on our bank loans and on our related party loan with Paragon Shipping Inc. ("Paragon Shipping").

Net cash from Investing Activities

Net cash from Investing Activities for the year ended December 31, 2014 was $2.0 million, representing a decrease in restricted cash resulting from the amendment in minimum liquidity required to be maintained under our loan agreements.

For the year ended December 31, 2013, there was no cash from investing activities.

Net cash used in Financing Activities

Net cash used in Financing Activities for the year ended December 31, 2014, was $29.8 million. On April 15, 2014, we completed the public offering and concurrent private placement of 5,500,000 Units, each consisting of one common share and one warrant to purchase 0.40 common shares (the "Units") at a public offering price of $2.05 per Unit, resulting in net proceeds of $10.6 million in the aggregate, net of underwriting discounts, commissions and other offering costs of $0.7 million in the aggregate. During the year ended December 31, 2014, we repaid $38.2 million of our debt, paid financing costs of $0.1 million and made cash payments to our preferred shareholders of $2.1 million.

Net cash used in Financing Activities for the year ended December 31, 2013, was $30.8 million. On March 18, 2013, we completed the public offering and issuance of 4,000,000 of our common shares, resulting in net proceeds of $19.9 million, net of underwriting discounts, commissions and other offering costs of $1.1 million in the aggregate. In July, October and November 2013, we completed the public offering and issuance of 916,333 shares of our 9.00% Series C Cumulative Redeemable Perpetual Preferred Shares (the "Series C Preferred Shares"), resulting in net proceeds of $20.5 million, net of underwriting discounts, commissions and other offering costs of $1.5 million in the aggregate. $19.7 million out of the net proceeds from the Series C Preferred Shares offering and our cash reserves were used to redeem and retire all of our outstanding Series B-1 Preferred Shares. During the year ended December 31, 2013, we repaid $36.7 million of our debt, including our related party loan with Paragon Shipping, paid financing costs of $0.2 million, made cash payments to our preferred shareholders of $1.7 million and paid dividends to common shareholders of $12.9 million.

Recent Developments:

Effective January 2, 2015, we and Allseas mutually agreed to terminate a portion of the commercial management services that were provided by Allseas under the terms of the original management agreements. The respective commercial management services were taken over on substantially similar terms by Seacommercial Shipping Services S.A., or Seacommercial, a related party entity controlled by our Chairman, President and Chief Executive Officer, Mr. Michael Bodouroglou, which will provide sale & purchase and charter brokerage services for our fleet. Allseas will still be responsible for the overall commercial management of our vessels, which includes, among other things, operations and freight collection services, obtaining insurance and finance and accounting functions.

Liquidity:

As of December 31, 2014, our cash and restricted cash (current and non-current) amounted to $14.6 million in aggregate, of which $8.0 million is considered restricted for minimum liquidity purposes under our loan agreements. As of December 31, 2014, we had total outstanding indebtedness of $134.95 million, of which $21.45 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 December 31, 2014, we were in compliance with the covenants contained in our loan agreements, as amended to give effect to waivers we were granted. As of December 31, 2014, 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 December 31, 2014.

During the second quarter of 2015, the charters of our OOCL vessels expire. Specifically, the earliest redelivery date for the OOCL Hong Kong is May 2015, while the expected redelivery of the OOCL China is June 2015, and depending on the prevailing market conditions around that date we may extend the charters or find new employments. In addition, in July 2015, the loan in relation to the OOCL vessels matures and we will be required to pay a balloon amount of $10.0 million together with the last installment. Depending on the employment of the vessels, we intend to negotiate the extension of the loan for as long as the charters are in place, or to re-finance the loan.

In addition, 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 January 2, 2015, we made a cash payment of $0.5 million with respect to our Series C Preferred Shares, for the period from October 1, 2014 through December 31, 2014. As of December 31, 2014, 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 January 2015, the Box Queen entered into a time charter with Evergreen Marine (UK) Ltd. ("Evergreen"), for a period of 10 to 20 days, at a gross daily charter rate of $15,000, and in February 2015 entered into a time charter with Maersk Line A/S for a re-positioning trip to Asia.

In February 2015, the MSC Emma entered into a time charter with CMA CGM for a period of 12 months, at a gross daily charter rate of $13,500.

Pursuant to our chartering strategy, we focus on containerships with carrying capacities ranging from 1,700 TEU to 7,000 TEU employed on short- to medium-term time charters of one to five years 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. We may also, under certain circumstances, opportunistically employ our vessels on shorter-term charters or our vessels may operate on the spot market. Based on the earliest redelivery dates, the Company has secured under such contracts 43% of its fleet capacity for the remainder of 2015. 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 March 4, 2015:

Conference Call and Webcast details:

The Company's management will host a conference call to discuss its fourth quarter and year ended December 31, 2014 results on March 5, 2015 at 8:00 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 10061727.

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 10.1 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.

Contacts:

Box Ships Inc.
Robert Perri, CFA
Chief Financial Officer
Tel. +30 (210) 8914600
E-mail: [email protected]

Investor Relations / Media
Allen & Caron Inc.
Michael Mason (Investors)
Tel. +1 (212) 691-8087
E-mail: [email protected]

Len Hall (Media)
Tel. +1 (949) 474-4300
E-mail: [email protected]

- Tables Follow –

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

SOURCE Box Ships Inc.

Related Links

http://www.box-ships.com