TOP Ships Inc. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; the provided text does not give separate Q4 results. Financial statements are prepared under U.S. GAAP. Amounts below are U.S. dollars.
Business context and performance
TOP Ships owns and operates oil, petroleum-product and chemical tankers, primarily under time charters. Its average fleet was 7.1 vessels in 2021, down from 9.5 in 2020; all vessels were employed on time charters. The company reported that it focused on larger crude carriers and scrubber-fitted vessels.
| Metric | 2021 | 2020 | Change / context |
|---|---|---|---|
| Revenue | $56.4 million | $60.2 million | Down 6%, mainly reflecting a smaller average fleet |
| Average daily TCE | $22,020 | $17,314 | Higher, partly offsetting the fleet reduction |
| Operating income (loss) | $14.8 million | $(1.8) million | Improved by $16.6 million |
| Net income (loss) | $8.6 million | $(22.8) million | Improved by $31.4 million |
| Net income attributable to common shareholders | $5.4 million | $(28.8) million | After Series E dividends and deemed dividends |
| Basic and diluted EPS | $0.14 | $(1.22) | Per common share |
| Cash from operations | $16.1 million | $6.0 million | Increased by $10.1 million |
| Cash used in investing | $76.7 million | Cash provided: $181.3 million | 2021 included $115.5 million of vessel-construction advances |
| Cash from (used in) financing | $43.6 million | $(177.3) million | 2021 debt proceeds were partly offset by repayments |
Financial position and liquidity
- At December 31, 2021, total assets were $330.8 million, total liabilities $221.4 million, mezzanine equity $16.1 million and stockholders’ equity $93.2 million.
- Cash and cash equivalents were $2.4 million; restricted cash was $4.0 million. The filing reports total cash and restricted cash of $6.4 million.
- Working capital was negative $31.8 million. Related-party amounts payable, including vessel-acquisition obligations, were a significant contributor.
- Debt, excluding deferred financing fees, was approximately $153.3 million, including $54.7 million associated with vessels held for sale. Debt net of deferred fees was $150.6 million. The company reported compliance with financing covenants at year-end.
- Debt includes floating-rate facilities. Management estimated that a 1 percentage-point increase in three-month U.S. dollar LIBOR would raise annualized 2022 interest expense by approximately $0.7 million.
- No common-share dividends were paid in 2021. Series E preferred dividends were $1.9 million for the year; $968,000 was accrued and unpaid at year-end.
Material changes, outlook and risks
- Year-over-year improvement: Lower fleet-related costs, lower interest and finance costs, and the absence of 2020 vessel-sale losses and charter termination fees contributed to the return to profitability. Operating lease expense rose to $10.8 million from $0.8 million, reflecting the full-year effect of the bareboat leases for Eco Bel Air and Eco Beverly Hills.
- Unusual items: A $1.2 million impairment charge was recorded for Nord Valiant before its sale. The 2020 comparison included $12.4 million in vessel-sale losses and $4.8 million in charter-termination fees. The company also recorded $10.7 million of loss on the 2020 sale-and-leaseback of Eco Bel Air and Eco Beverly Hills.
- Fleet and financing after year-end: Two VLCCs and a Suezmax were delivered in early 2022. The company stated that vessel-acquisition commitments had been settled by the report date. The two MR tankers classified as held for sale at year-end were sold in February and March 2022.
- Liquidity outlook: Management said cash on hand and expected operating cash flows would cover liquidity needs for the twelve months following issuance of the financial statements. It expected 2022 operating cash flow to benefit from the newly delivered vessels. These are management expectations, not formal earnings guidance.
- Related-party capital and governance: After year-end, $24.4 million of related-party amounts payable was exchanged for Series F preferred shares. As of the report date, 7.2 million Series F shares had been issued; they carry 10 votes each and 13.5% annual cash dividends. Together with Series D and E preferred voting rights, CEO-affiliated interests may control approximately 82.4% of total voting power, based on the filing’s April 2022 calculation.
- Key risks: Tanker-rate and vessel-value volatility, charterer concentration (five charterers generated all 2021 revenue), customer and financing counterparty risk, debt service and restrictive covenants, floating interest rates, COVID-related crew and operating disruption, environmental regulation, and related-party conflicts. The company identified the SEC investigation into historical offerings as ongoing; it could not predict its outcome or financial effect. A prior securities class action was dismissed, with the dismissal affirmed on appeal.
- Assurance: The independent auditor issued an unqualified opinion on the financial statements and reported effective internal control over financial reporting as of December 31, 2021. Related-party acquisitions and the excess of consideration over acquired assets were identified as a critical audit matter.
Important facts for investors to verify
- Review the audited statements and notes for the composition and maturity profile of debt, sale-and-leaseback obligations, and balloon payments.
- Confirm current unrestricted cash, covenant headroom, and the post-year-end effect of settling vessel commitments and converting related-party payables into Series F preferred shares.
- Examine Series E conversion and dividend terms, Series F redemption and dividend terms, and the resulting voting control and potential dilution.
- Check the status and any developments in the SEC investigation, and review the valuation and approval process for transactions with CEO-affiliated entities.
- Verify charter coverage, rates, renewal options, and exposure to the five charterers that accounted for all 2021 revenue.
- Assess whether reported fleet growth, charter receipts, and management’s liquidity expectations were achieved after the reporting date.