TOP Ships (US:TOPS)2021-04-23 21:17Operational Metrics and Performance - The company defines key operational metrics including calendar days, available days, operating days, and fleet utilization to assess performance and efficiency[325]. - Time charter revenues are influenced by the number of vessels, operating days, and daily charter hire rates, which are affected by market supply and demand dynamics[329]. - The company has four MR product/chemical tankers and three suezmax crude oil tankers as of the report date, with plans to operate vessels in the spot market until appropriate charters are secured[333]. - Voyage expenses consist mainly of port charges, fuel costs, and commissions, with the amount driven by travel routes and bunker fuel prices[336]. - Vessel operating expenses are analyzed on a U.S. dollar per day basis and can fluctuate due to unplanned repairs and regulatory compliance[340]. - Dry-docking costs vary based on vessel age, location, and compliance with international standards[341]. - The principal factors affecting profitability include charter rates, tanker utilization, operating expenses, and financing costs[346]. Financial Performance - Total charter revenues decreased by $5.9 million, or 9%, from $66.1 million in 2019 to $60.2 million in 2020[348]. - Average number of vessels employed decreased from 11.1 in 2019 to 9.5 in 2020, impacting all vessel-related revenues and expenses[349]. - Operating lease expenses decreased by $6.3 million, or 89%, from $7.1 million in 2019 to $0.8 million in 2020[350]. - Management fees to related parties increased by $3.2 million, or 130%, primarily due to purchase commissions absent in 2019[351]. - Vessel depreciation increased by $0.8 million, or 6%, mainly due to new vessels delivered in 2020[352]. - Interest and finance costs increased by $2.9 million, or 16%, primarily due to accelerated amortization of deferred finance fees[354]. - Loss on sale of vessels amounted to $12.4 million due to the sale of multiple vessels in 2020[359]. - Other operating loss from charter termination fees totaled $4.8 million in 2020[360]. Assets and Liabilities - As of December 31, 2020, the basic charter-free market values of owned vessels were estimated to be higher than their carrying value by approximately 1.6%[362]. - The company recognized an impairment charge of $3.1 million on investments in unconsolidated joint ventures in December 2019[358]. - As of December 31, 2020, the company had a net indebtedness of $107.0 million, with total indebtedness amounting to $104.6 million after excluding unamortized financing fees[378]. - The company had remaining contractual commitments for fleet acquisition totaling $182.0 million as of December 31, 2020, with $116.4 million payable in 2021 and $94.7 million payable in 2022[379]. - Cash and cash equivalents amounted to $23.3 million as of December 31, 2020, including $4.0 million classified as restricted cash[378]. - The company has contractual obligations totaling $380.0 million, with long-term debt accounting for $106.9 million and interest related to long-term debt at $33.8 million[432]. Cash Flow and Financing Activities - Net cash used in operating activities decreased by $13.2 million, or 69%, for 2020, totaling $6.0 million compared to $19.2 million for 2019[384]. - Net cash provided by investing activities for the year ended December 31, 2020 was $181.3 million, primarily from $310.0 million in net proceeds from vessel sales[387]. - Net cash used in financing activities for the year ended December 31, 2020 was $177.3 million, with $129.7 million from equity offerings and $60.2 million from long-term debt proceeds[390]. - The company expects operational cash flow to increase for the remainder of 2021 compared to the same period in 2020, driven by the contribution of two Suezmax tankers[382]. - The company had a working capital surplus of $19.7 million as of December 31, 2020[382]. - Non-cash adjustments for the year ended December 31, 2020 totaled $31.8 million, mainly due to depreciation expenses and losses from vessel sales[385]. - The company plans to finance unfinanced contractual commitments through operational cash flow, debt, or equity issuances, or a combination thereof[381]. Sale and Leaseback Agreements - The company entered into a sale and leaseback (SLB) agreement with Cargill for the vessel M/T Eco Marina Del Ray, generating gross proceeds of $32.4 million and committing to a buyback price of $22.7 million after five years[413]. - The SLB with Bank of Communications Financial Leasing Company resulted in gross proceeds of $21.7 million for M/T Nord Valiant and $24.1 million for M/T Eco California, with bareboat charter rates of $5,875 and $6,550 per day respectively[414]. - The SLB with China Merchants Bank Financial Leasing Co. Ltd. provided gross proceeds of $91.4 million for M/T Eco Bel Air and M/T Eco Beverly Hills, with a bareboat charter rate of $1.5 million per quarter per vessel[416]. - The SLB with AVIC generated gross proceeds of $60.2 million for M/T Eco Los Angeles and M/T Eco City of Angels, with a bareboat hire rate of $9,435 per day for the first five years[424]. - The company has continuous options to buy back vessels under various SLB agreements, with specific purchase prices stipulated in the agreements[421]. - The company is in compliance with all covenants related to its sale and leaseback agreements as of December 31, 2020[426]. Market Conditions and Risks - The COVID-19 pandemic has significantly reduced global demand for oil and may materially impact the company's earnings and financial condition for 2021[429]. - The company has fixed interest rates on all SLB financing facilities, mitigating exposure to interest rate risk as of December 31, 2020[614]. - In 2020, approximately 96.9% of the company's expenses were in U.S. dollars, 2.6% in Euro, and 0.5% in other currencies[615]. - A 5% decrease in the exchange rate from $1.1419 to $1.0848 would result in an expense saving of approximately $0.09 million for the year ended December 31, 2020[616]. - For the year ended December 31, 2019, a 5% decrease in the exchange rate from $1.1192 to $1.0633 would result in an expense saving of approximately $0.08 million[616].