Q3 2019 Earnings Call
Thank you for joining us for Navios Maritime Holdings third quarter 2019 earnings conference call with a checking the company your chairman and CEO Mrs. Angeliki Frangou, Chief Financial Officer, George Achniotis, Vice Chairman, Ted Petrone, SPP, a strategic planning young Karyotis. As reminder, this conference call is being webcast to access the webcast. Please go to the Investor section of.
Yes Maritime holdings website at Www Dot Navios dot com, you'll see the webcast link in the middle to page in a copy the presentation reference in today's earnings conference call can also be found out now I'll review the Safe Harbor statement. This conference call could contain forward looking statements and meeting of the private Securities Litigation Reform Act of 1995, but now those holdings pardon.
Statements that are not historical facts such forward looking statements based upon current beliefs and expectations of Navios Holdings management and are subject to risks and uncertainties, which could cause actual results could differ from the forward looking statements.
Such risks and mostly just got to Navios Holdings finds the Securities Exchange Commission. The information said, what's your and should be understood in light of such with Navios Holdings does not assume any obligation to update the information contained in this conference call.
The agenda for today's call it the solid well begin in the mornings call was still my remarks, the management team and after we'll open the call to take questions now I turn the call over to Navios Holdings, Chairman and CEO Angeliki Frangou Angeliki. Thanks, and good morning thought of you join us within days going I'm pleased with a size for the third quarter of 2019, when you bought.
The revenue, although some of the 41.6 media.
Adjusted EBITDA of 98.8 meal and adjusted net income that'd be 5.6 me.
Not the nation that box at the I showed people they gave size five D.C. I know $19000 per day.
And then and a dime, Jonathan squeeze nearly $15575 per day for the third quarter of 2019 order what did he was at sometime in the world. There's anything they know how should we have no versus being retrofitted with Scott.
No. It's anything right now there's group, we're going to on automotive to kind of vessels. So for publicly listed companies into investment to be good.
I broke out bound and dangerous and living in relationships on slide four we focus on a diversified group then exposed to South America. The Bush books. It remains excellent the companies have bye.
And then maybe one in EBITDA generation for the last word of mouth and it gives the of 2019.
Brian I recently increased each estimation I mean I have not so good at the wind asleep, especially would be.
We continue to see opportunity and we're investing in and I believe it bought but we've been busy which should mean without dollywood, especially we do know why it creates if I knew I did publication to existing if you're just die with that activity done to us.
Then need to Navios <unk> scope, what they've been was upgraded to lead to buy more.
Because of days at the company to be block in 2018.
Bob I should enjoy don't get no with about like on it that have made oh, well glaxo driving navias containers are container folks they pretty high school showed what they've never had.
Navios acquisition I think a company is operating you me a robust stopped at eight environment.
<unk> <unk> Ah lisanti, but we're showing the management division will do anything new Glassia favorable to says we saw agreement. They see provides seven other benefits they seem to be most versus minus movie. So my name's ongoing operation and that he made you named meant that it another is associated with managing Duncan.
And container vessels.
I bought the harder than maybe it was reclassified hominem short them liabilities to lock down I believe.
The management agreement provides significant goes it will be by providing fixed cost when I sleep, we estimate about 27 million in nine years Opex savings compared to market books you.
As an update to our balance sheet, we have reduced a short them. They booth is by almost 830 meal and increased our long term liabilities. My 20 can immediately on the net basis. We have also Burgess 83.5 million in face value unless you more of this node so five in 2019.
We have also been actively doing Ewing asleep idling and bareboat chartered in fleet average age degree by 26%.
2017, we acquired then this is with a novel stage 4.2 here for 247.3 me actual do as.
With an average age or 16.7 here for 90.8 million as I mentioned. It is we're also looking at monetizing Navios Europe , one money good dating this and actually in December 2019.
So goosey 2019, and then have to pinpoint one in Oh I see level do you from Navios Europe , one nice CKD Ida Newmont has been agreement effective August 31st 2019, NSM began providing us with go measurement. They are getting manas when a set of issues opex would be fix we'll do it.
Yes, it's $8700 seeks to see but if they sort of good day, increasing by 3% I knew that often under the new asked me. So do show. This agreement allocated DNA costs would have been impressed no decision not to see we'd be charged under the agreement either for share repurchase.
Action, both floating donation of loans and not as financing transaction. It determination feet will be paid <unk> management agreement is denominated before that and Oh, yes, fine and names average weeks Opex under the New management agreement is about 55% lower compared to the <unk>.
It might get opex, thereby providing us with 27.2 media, although expected on your Opex savings.
Slide seven goes through our receivables so navios Europe , one another's you'd have to.
Management will be liquidating Navios Europe won in December of 2019, and will receive a mountain obviously, we're well on the liquidation day net difficult I'm curious if you didn't see liberty was $13.1 million.
Slide eight cents for not just no cash flow breakeven.
Well do fall of 2019, we have fixed 78.5% well available days at fixed rates and then 2.2% Wow variable based on floating rate. These I've been in a low breakeven they well $5823 that day.
We expect to generate about 13.5 million in revenue. So my 994 open ended they've actually gone my gets at that age, which would result in about eight mean that even expected operating cash flow for Q4 2019.
Our cost include all operating expense doesn't cost via next basis, I would I seem to fix the GAAP diluted payment.
Nine highlights our strong liquidity position net debt to book of delays Asian was 8.1% and would have gone well the Hyundai 615 million I to Denver said it 2019, we have no significant omitted seeping girls got banks.
Also had no material debt maturity until January 20 tend to do.
Yes, I 11 aboard the present bones of it thinking much would be no don't but 2021.
I would like now then the gone over $2. Just you know to Navios holding CFO . Thank you and Gilligan. Please turn to slide 10 for any view that Navios Holdings' financial highlights for Q3, and the nine months to September 2000 idea.
Right to point out that there is absolutely a quarter were affected by this a little bit management company and the subsequent deconsolidation, how I've used containers as of August 2000 idea.
Following the sale.
The financial statements or Navios holdings should be simplified.
He be done that income for the third quarter when adjusted to exclude the six and they have lost from the deconsolidation of NMC I, including <unk> point 8 million net loss from discontinued operations.
At 10.6 million write off of intangible assets by in any 1.7 million a bare metal relating to this end <unk> one of our oldest vessels.
Adjusted EBITDA for the quarter includes 9.7 million from an EPS yet.
Moving on M.C. I, just did EBITDA for the quarter was 89.1 million.
The increase of 42% compared to the 62.8 million achieved in 2018.
Bankers and adjusted EBITDA is mainly attributable to the 9% increase in a time charter at eight achieved during the quarter compared to last year.
18% increase in baby Dove, now, there's other make and logistics and 7.4 million improvement in the equity pick up from affiliates, mainly due to the bromine the tanker sector and a 12.4 million gain from the repurchase of our bonds.
Adjusted net income for the quarter was 35.7 million compared to 944000 in 2000 idea.
The anchors is mainly due to the increase in EBITDA.
Turning to the nine month results adjusted EBITDA for the period includes there didn't mean young from an EPS.
Excluding NMTC adjusted EBITDA increased by 46% to about 195 million from.
To 4 million.
Yeah.
In addition to the items that affected because he decides if we then that income where adjusted to exclude 23.8 million impairment loss from the sale of vessels.
Turning to house made an impairment loss of our investment in any.
And 4.1 million loss from discontinued operations over the next year.
The increase in adjusted EBITDA was mainly attributable to a 20% increase in baby Dove, aggrastat or make allergies.
17.9 million increase in the equity pickup from affiliates and it's every 3.7 million gain from the repurchase of our bonds.
Adjusted net income for the first nine months of 2000, and Dan was 34, and a half million compared to a net loss of 51.9 million in 2018.
The improvement was mainly due to increases in maybe that in a 6.8 million decreasing antennas caused mainly due to their bond repurchases.
Moving to slide 11 in our balance sheet highlights the balance sheet reflects the sale of in Israel and the transfer of certain liabilities and the new loan provided by yes.
Yes. It is until the transaction candidly I believe is reduced by approximately $800 million.
In a long long term payable to MSM over hundred 21.5 million or was that.
As of September Thirtyth 2019, we had to have a 6.5 million in cash compared 250.8 million at December 31st of all right.
Two or three we used 24.3 million enough cash to the branches that 7 million nominal value of the ship mortgage knows you 2022.
Since the beginning of the year would it pushes 83, and a half a million nominal value of the bonds for 49 million.
I would like to point out that we have no significant debt maturities on the 22.
Over the next slides I will briefly review our affiliates, please turn to slide 12.
Following the sale of the job partner Navios Holdings owns 18 any have person of Navios partners.
Navios partners ownership of that seven vessels.
To dry bulk and five containers.
And I remember also owns about 34% of Navios containers.
The company generated significant cash flow over the past few quarters, which was used to refinance its term loan b and de leveraged balance sheet.
We expect what is your about 25 million in cash dividends from an amendment annually and since 2000 made what do you see is about 200 million and dividends.
Slide 13.
I've used holdings owns about their to 1% of Navios acquisition.
And then they have simply the 41 tankers, including 13 businesses.
Voluntary covered in Atlantic your market the company's adjusted EBITDA.
Was more than doubled club O <unk> 24 million in Q3 of 2019 compared to 10 million in 20 2080.
We expect to receive about 6 million dividends from in a during 2019 and since 2011, we saved about 92.7 billion dividends.
Moving to slide 14, Navios holdings owns about 4% of Navios spontaneous.
And M.C. I has a fleet of 29 Containerships. The company was established in early 2017 to leverage the weakness in the containership sector.
Scaled up its fleet quickly and efficiently.
As December 2018, Navios Quantenna shares have been trading on the NASDAQ Global select market, making the next day business growth.
Now, we'll turn the call over to Dennis Geiger orders for his review of the Microsoft or make and logistics results. Thank you George.
Slide 15 provides an overview of then obviously with the sticks business Navios logistics operating report that im not which are complemented by our box skewed or even passport painful and product tanker fleet for custom chemistry.
Now I'll give you a distinct EBITDA for the last 12 months. He is 100 point sixmillion with two cents coming from ports.
We are growing our board business, we're developing a new we'd be better push leaving the port facility in Mato Grosso deferral in pricing.
The proposed facility, we capitalized on the significant region my passion for even transportation of grain exports and fertilizer in liquid imports will have been gardening, because thats, what license and expect to commence construction at the beginning of 2020 and when looking at other opportunities as well.
We selectively expand on a button carbonless fleet, when we secured both lumped them client contracts and financing.
Sadly we agreed to be seeks you could Barclays Oh, Funky 70000 deadweight capacity.
Got a cost of 15.8 million with available credit for up to 75% of the purchase price.
These boxes to gave it was to boost both from our existing fleet have been talking about five years to a major regional counterpart.
And not expected to generate approximately seven point fourmillion on your EBITDA of which 4.7 million is attributed to the Newbuilding bodies. The five year are going to get EBITDA from Barclays more than covered as the initial investment.
Please turn to page 16 in the third quarter of 2019, EBITDA increased 27% to 52.5 million from 25.5 million during the same period last year.
Q3, 2019 Port segment, EBITDA increased 34% to black people inside of me.
The increase is attributed to higher throughput in our grain sediment and go to wine that but it's 1.5 million tones compared to just 0.5 million tones in Q3 2018.
This is a result already cognitive they will do one that's really been production from last years.
On the I don't know to both sides valleys has indicated that they intend to increased by 60%. We I don't know to manage through good for the fourth quarter of 2019 compared to the same period last year.
Finally estimates that we perceive approximately 0.5 million don't well financed in the fourth quarter of 2019 compared to 0.3 million tones in Q4 2018.
I don't put 2019, we expect through so good will be about 1.4 million tones and 76% increase over the 1.1 million tons for 2018.
Expected rate of the fourth quarter 2019 value will be moving about 2 million tons annually only about 50% or the for me on minimum guarantee for which we have paid annually in the box business Q3, 2019, EBITDA increased 54% to 6.7 media from pardon me among the same period last year maybe.
Due to more category Passporting and other income from sort of asking.
I would just be last Q3 2019, EBITDA remained stable at 5.2 me.
Last year EBITDA was positively affected by approximately zero point for 7 million compensation for the lately very open new building, we've had an extra tanker. Excluding this effect EBITDA has increased 16% mainly due to more operating days forecasting 2019, net income was 14.3 million compared to six.
Once again in the among the same period last year.
The increase is mainly attributable to the improved operating performance, we're fortunate segment as well as lower interest expense and finance cost.
Turning to the financial results for the nine month period, ending September 32019.
Revenue increased 7% EBITDA increased 90% to 84.2 million and net income increased 250% to 29.3 million from 9.7 million in the same period last year.
Please turn to slide 17.
Navios logistics had a strong balance sheet cash at the end of Q3 2019 were 75.6 million compared to 76.5 million at the end to solve anything net debt to book capitalization was 53% compared to 56% at the end of 2018, I would now like to benefit going over to set the tone for the English.
To review. Thank you Tony Please turn to slide 18 fighting presents our diversified Drybulk fleet, consisting of 56 drybulk vessels totaling 6 million deadweight 18, Capes 28, Panamaxes did supramaxes and two Handysize. We continued to be one of the largest U.S. listed dry bulk fleet established over 60 years ago. The average age.
The fleet is 7.6 years, 24% younger than the industry average Navios group total fleet of 195 vessels includes 95, Drybulk vessels 54 tankers and 46 container vessels Navios has a highly diversified public shipping company.
Please turn to slide 20.
IMF forecast World GDP growth at 3% for 2019, and 3.4% for 2020, the emerging and developing Asian markets, which drive Drybulk demand are expected to grow at a healthy 5.9% for this year, a 6% 2020.
Drybulk market experienced a volatile 2019 with earnings falling to near historic lows in Q1, mostly due to disruptions in iron ore supply in both Brazil and Australia.
In the third quarter. The BTI reached a nine year high of 20 518 due to strong demand across all bulk commodity sectors, along with a reduction in fleet capacity due to scrubber retrofitting.
Volatility continued recently as TBD I pulled back from September high by approximately 50% on the back of government governmental cargo restrictions in the Pacific.
Slowdown in exports in the Atlantic as well as high vessel deliveries and minimal scrapping.
Turning to slide 21.
For 2000 for 2020 Drybulk demand for the three major cargoes of iron ore coal and grain is forecast to outpace 2019 by 1.7% or approximately 55 million metric tons.
Increases led by iron ore, which is expected to grow by 2.1% or 30 million metric tons much events will come from a 7% increase in Brazilian exports, adding a ton miles.
At the same time to supply vessels is expected to reduce.
As vessels are retrofitted with scrubbers about 3.7%.
The Capesize fleet is expected to be out of service for the first half of 2020.
Given current supply and demand forecast the fundamentals going forward remain well balanced.
20 to.
Chinese steel production growth is an impressive 7% through October .
Chinese steel exports continue to be strong due to a large infrastructure projects, both inside and outside China. The belt wrote initiative remains the cornerstone of Chinese economic plans for the next few years supporting steel in power demand domestically and abroad.
The Chinese government continues to stimulate the economy with large infrastructure projects, resulting in an 11% increase it internal steel consumption.
October of this year.
Chinese steel mills have reduced their iron ore stockpiles by about 32 million tons between June 2018, and the middle of November this year with additional availability of iron ore. The stockpiles are expected to be replenished further driving demand for capesize vessels.
Please turn to slide 23.
Demand for colon Asia remains strong Chinese seaborne coal imports increased by 10% through October 2019.
India is expected to surpass China as the world's largest importer of coal in 2019 coal imports to India are up by 15% to August .
Indian domestic coal struggles to overcome logistics issues and therefore coal imports are expected to remain strong.
Turning to slide 24 worldwide grain trade has been growing by 5.2% CAGR since 2008, mainly driven by Asian demand.
North and South American continue to produce more grain and they consume while Africa, the middle East and South East Asia consume more grain they produce.
Given continued population growth along with changing diet. The long term trend, it's whether its continued growth in the west East grain trade.
Moving to slide 25, net fleet growth is forecast to be about 3.5% in 2019, and 3.3% and 2020.
The current order book is about 10% of the fleet, which is one of the lowest on record.
Newbuilding contracts contracting is down over 50% from 2018 levels.
Accordingly, net fleet growth is expected to remain level going forward.
Slide 26.
So the over 20 years of age or about 7.1% of the total fleet, which compares favorably with the previously mentioned record low order book.
Through mid November scrapping at 6.3 million deadweight tons has already surpassed total scrapping for 2018.
The added cost for complying with IMO regulations for a few ballast water treatment systems and fuel regulations are expected to result in higher scrapping going forward.
In conclusion positive supply and demand fundamentals, along with reduced fleet efficiency caused by about 2020 to provide significant support to the drybulk market into 2020.
This concludes my presentation I would now like to turn the call over to Angeliki for final comments Angeliki.
Thank you Dave these companies.
We opened up.
At this time.
Inform everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Well pause for just a moment.
Ross.
And there are no questions at this time I would like to turn call over to Mr.
Thank you this completes our Q3 side.
We expect the strong.
<unk>.
It will have a developing much stronger that 2018.
Additionally, as you can he asked why not.
No.
I.
Oh, and they're performing well and.
Investment opportunity remains strong in that area. Thank you.
This concludes today's conference you may now disconnect.