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Gener8 Maritime, Inc. Announces First Quarter 2016 Financial Results

NEW YORK, May 11, 2016 /PRNewswire/ -- Gener8 Maritime, Inc. GNRT, +0.55% ("Gener8 Maritime" or the "Company"), a leading U.S.-based provider of international seaborne crude oil transportation services, today announced its financial results for the three months ended March 31, 2016.

Highlights

  • Recorded adjusted net income of $64.8 million, or $0.78 basic and diluted adjusted earnings per share, for the three months ended March 31, 2016, a 107% increase in adjusted net income compared to the same period in the prior year.
  • Increased net voyage revenue by $46.2 million, or 61.2%, to $121.7 million for the three months ended March 31, 2016, compared to $75.5 million from the same period in the prior year.
  • Increased vessel operating days by 31.1% to 2,822 in the three months ended March 31, 2016 compared to 2,153 in the same period in the prior year.
  • Accepted delivery of five "ECO" newbuilding VLCCs, the Gener8 Apollo, the Gener8 Supreme, the Gener8 Ares, the Gener8 Hera, and the Gener8 Success during the first quarter of 2016 and an additional "ECO" newbuilding VLCC, the Gener8 Nautilus, in April 2016.
  • Entered into interest rate swap transactions in May 2016 with an aggregate initial notional amount of $832.3 million and a maximum notional amount of $1.2 billion for all existing credit facilities with floating interest rate exposure in May 2016.

"Following a transformative year for our Company in 2015, we are pleased to report that 2016 has gotten off to a strong start as we continue to execute on our strategic plan. In the first quarter of 2016, we more than doubled our adjusted net income from the first quarter of 2015 and dramatically increased our net voyage revenue," said Peter Georgiopoulos, Chairman and Chief Executive Officer of Gener8 Maritime. "Our newbuilding "ECO" VLCCs continue to be delivered into a strong tanker market, with five vessels delivered in the first quarter of 2016 and an additional vessel delivered in April 2016. As of the date of this release, we have 33 vessels on the water and anticipate taking delivery of an additional 10 VLCCs this year and the final two VLCCs from our newbuilding program in early 2017. Our earnings potential increases with every incremental delivery, and our fleet becomes younger (based on average age) and more efficient. This ultimately helps to position us for the future. On a fully delivered basis, the DWT-weighted average age of our fleet will be 5.0 years, and our VLCCs will have an average age of just 3.1 years, giving us the youngest VLCC fleet among our public peers."

Leo Vrondissis, Chief Financial Officer, added, "We have also recently entered into a series of interest rate swap transactions with an aggregate initial notional amount of $832.3 million and a maximum notional amount of $1.2 billion. The interest rate swap transactions are meant to be cash flow hedges, which effectively fix the interest rate on a significant portion of our existing credit facilities where we have interest rate exposure."

Fleet Performance

The average TCE rates earned by Gener8 Maritime's vessels are detailed below:

Gener8 Maritime Average Daily TCE Revenues(1)





Three Months Ended



Mar-16

Mar-15


VLCC




Average Spot TCE

$60,229(2)

$43,832


Average Time Charter Rate

$40,654

$37,652






SUEZMAX




Average Spot TCE

$37,328

$37,563


Average Time Charter Rate

-

$18,992






AFRAMAX




Average Spot TCE

$25,064

$27,857






PANAMAX




Average Spot TCE

$19,448

$27,568






HANDYMAX




Average Spot TCE

$5,050

$19,461







(1)

Time Charter Equivalent, or "TCE," is a measure of the average daily revenue performance of a vessel. The Company calculates TCE by dividing net voyage revenue by total operating days for its fleet. Net voyage revenues are voyage revenues minus voyage expenses. The Company evaluates its performance using net voyage revenues. The Company believes that presenting voyage revenues, net of voyage expenses, neutralizes the variability created by unique costs associated with particular voyages or deployment of vessels on time charter or on the spot market and presents a more accurate representation of the revenues generated by its vessels. Please refer to the tables at the end of this release for a reconciliation of TCE and net voyage revenues to voyage revenues.

(2)

Excluding an increase of approximately $1.4 million in a reserve during the three months ended March 31, 2016 related to receivables from the Unique Pool that we expect to collect, the VLCC Average Spot TCE rate for the three months ended March 31, 2016 would have been approximately $61,488.

Spot TCEs include all spot voyages for the Company's vessels, including those that were in Navig8 pools.

First Quarter 2016 Results Summary

The Company recorded adjusted net income of $64.8 million, or $0.78 basic and diluted adjusted earnings per share, for the three months ended March 31, 2016, compared to adjusted net income of $31.2 million, or $0.94 basic and diluted adjusted earnings per share, for the three months ended March 31, 2015. Please refer to the tables at the end of this release for a reconciliation of adjusted net income to net income.

Adjusted EBITDA for the three months ended March 31, 2016 increased by $38.0 million to $87.7 million compared to $49.7 million for the same period in the prior year. Please refer to the tables at the end of this release for a reconciliation of adjusted EBITDA to net income.

Net income for the three months ended March 31, 2016 was $60.9 million, or $0.74 basic and diluted earnings per share, compared to net income of $30.9 million, or $0.93 basic and diluted earnings per share, for the same period in the prior year.

The average daily spot TCE rates obtained by the Company's VLCC fleet, including its vessels that were within Navig8 pools, was $60,229 for the three months ended March 31, 2016, an increase of $16,397, or 37%, from the same period in the prior year. The VLCC daily spot TCE rate would have been approximately $61,488 if not for a reserve of $1.4 million relating to the Unique Pool, which we expect to collect.

Voyage Revenues

Voyage revenues increased by $2.6 million, or 2.1%, to $124.0 million for the three months ended March 31, 2016 compared to $121.4 million for the prior year period. The increase was primarily attributable to an increase in average fleet size and charter hire rates during the three months ended March 31, 2016 compared to the same period in the prior year, and was partially offset by the transition of the Company's vessels from the spot market into the Navig8 pools, the revenues from which are presented on a net basis, and the sale of the Gener8 Consul in February 2016. The Company's average owned fleet size increased by 5.7 vessels, or 22.8%, to 30.7 vessels (4.0 Aframax, 11.0 Suezmax, 13.1 VLCC, 2.0 Panamax) for the three months ended March 31, 2016 compared to 25.0 vessels (4.0 Aframax, 11.0 Suezmax, 7.0 VLCC, 2.0 Panamax, and 1.0 Handymax) for the prior year period. During the three months ended March 31, 2016, the Company took delivery of five additional newbuilds vessels and completed the sale of the Gener8 Consul. Also contributing to the increase in voyage revenues was the increase in our fleet utilization of 3.0% to 98.7% for the three months ended March 31, 2016 compared to 95.7% for the prior year period. Fleet utilization was positively affected by fewer offhire days for scheduled drydocks and repairs and maintenance days, and a change of vessel management during the three months ended March 31, 2016 as compared to the prior year period.

Navig8 pool revenues. Navig8 pool revenues are distributed on a net basis after deduction of voyage expenses that are the responsibility of the pool, which reduces voyage revenues compared to spot charter revenues. During the three months ended March 31, 2016, we had 28 owned vessels in the Navig8 pools, which includes five additional newbuilding vessels that were deployed into the Navig8 pools during the three months ended March 31, 2016. During the three months ended March 31, 2015, we did not have any vessels deployed in the Navig8 pools. Our vessel operating days attributable to the Navig8 pools increased to 2,419 days for the three months ended March 31, 2016 compared to 0 days during the prior year period. As a result, our Navig8 pool revenues increased to $113.0 million for three months ended March 31, 2016 compared to $0 during the prior year period. Included in our Navig8 pool revenues were pool revenues associated with the chartered-in vessel the Nave Quasar, which was re-delivered to its owner in March 2016.

Time charter revenues. Time charter revenues increased by $1.2 million, or 20.0%, to $7.2 million for the three months ended March 31, 2016 compared to $6.0 million for the prior year period. The increase was primarily the result of increases in VLCC time charter hire rates and time charter days during the three months ended March 31, 2016 as compared to the prior year period, partially offset by the transition of our previously time chartered vessels into the Navig8 pools. Our time charter days decreased by 25 days, or 12.4%, to 176 days for the three months ended March 31, 2016 compared to 201 days for the prior year period. Our VLCC time charter days increased by 65 days, or 58.6%, to 176 days for the three months ended March 31, 2016 compared to 111 days for the prior year period.

Spot charter revenues. Spot market revenues decreased by $111.6 million, or 96.7%, to $3.8 million for the three months ended March 31, 2016 compared to $115.4 million for the prior year period. This decrease was primarily the result of the transition of our vessels from the spot market into the Navig8 pools, which resulted in a decrease in our spot market days by 1,725 days, or 88.4%, to 227 days for the three months ended March 31, 2016 compared to 1,952 days for the prior year period. This decrease was partially offset by an increase in spot market charter hire rates during the three months ended March 31, 2016 compared to the prior year period.

Voyage Expenses Voyage expenses decreased by $43.5 million, or 94.8%, to $2.4 million for the three months ended March 31, 2016 compared to $45.9 million for the prior year period. The decrease in the voyage expenses was primarily due to the 88.4% decrease in the Company's spot market days as a result of transitioning its vessels from spot market into the Navig8 pools, a decrease in oil prices during the three months ended March 31, 2016 as compared to the same period in the prior year, as well as...


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