Q4 2019 Earnings Call
Thank you for joining us for not just Mike I'm acquisition.
Operations fourth quarter and here into 2019 earnings conference call. We this today from the company aren't chairman and CEO Angeliki Frangou, My Chairman Mr. <unk>, the drone and Chief Financial Officer Mr. Neither Cody.
As a reminder is going to school it's been weight.
Watches, who I guess pace.
Visit the Investor section of Navios acquisitions website, Www Dot Navios acquisition costs.
You will see the web link in the middle of the page and a copy of the presentation referenced in todays earnings conference call will also be found.
Now I will review the Safe Harbor statement.
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This conference call could contain forward looking statements under the meaning of the private Securities Litigation Reform Act on 1995.
And I wish I position.
<unk> looking statements or statements, it's not historically.
Such forward looking statements are based upon the current beliefs and expectations I wish operations.
Management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements.
Such risks from what do you discussed in previous acquisitions filings with the Securities Exchange Commission.
The information set forth in should be understood my the such risks.
Position does not assume any obligation to update the information contained in this conference call.
The agenda for today's conference call is this.
First mean <unk> opening remarks, then just a bit drone well given information on update you need to see overview next mr. graduates.
Missions.
And lastly, we'll then open the call detailed questions no I tend to go to over time, it's acquisitions, chairman and CEO Mrs. Angeliki.
Jimmy keep thinking <unk> and good morning, Dawn of huge honest on todays call I'm pleased with an obstacle that fourth quarter and full year 2000.
One thing.
For the fourth quarter of 2019 now there are several of his recorded revenue.
85.4 media and they've done a 45.9 me anybody sandy increases of about 46% and therefore denied but then there's but the <unk> over Q4 2018.
<unk>.
Then in any also recorded net income.
6.6 media.
44 cents basic for Q4.
For the full year 2009 beam and the Navy Gordon and they haven't used 280.1 million and they've been DAPL the hominid blend do.
One floor.
On the representing increases of about 49% inhabitants, 70%, respectively over 2018.
We'd be glad <unk> distribution that this has been for Q4.
You can do they all you know English station my guess would adversely affected by.
Yes, and I said that it goes by then well don't have iOS in China, because it has recently it's definitely we are unable to provide any made me clearly indication or they said well not blended with the activity we have diligently morning doing the pain.
They don't but don't get market he's done anything for what the baby.
We have about 400 meal knockdown adopted the revenue about 69% about blended would be available days I speak with about 88% or what the real <unk> fixed on base today, having nothing to say, we also have market exposure and about.
For do you want, but then about plenty plenty available days and open all on floating rate.
Slide four reason some company highlights and then they.
Of course need four to six depressed <unk> with an average age 8.7 here.
We recently added hi.
Mr Fleet basically they do not isn't it up one goswami $73.2 million only see about when you do still fine.
We have an important on my time investment now there's going to do not the old 14.
No I find <unk> <unk>.
And then maybe bought his girlfriend massive they bought for the fourth bought it with four to 5.9 million any but now I'm going to 49% Hyatt and Q4 2018 for this with yet.
2019 on it but that was a competent blended eight one for me [laughter].
And I am not 2018.
We grew our sleep the minimum got done all day would these old Navios group won an added five well the I guess the slate that bypass warming did this 3.2 million of receivables into schemes line.
As I mentioned, a moment ago for Twentytwenty.
We have a good mix will fix that having an explosion that Mike go, but a year ago want to get things out there they but as I said it but they has increased by 56% to $48500 fuzzy and he bite at the two person to 19800 <unk> dollar flatten out a lot.
And Mike Glenn degree, but.
The 61754 they might do.
Slide six like the recent events, but.
Oh, My God I get my.
Got it.
Any grief in floating storage due to compliance with I'm, a blended blended English will of course.
I believe you will see able a baby globally.
I'm showing it did you do at 18 crude production mix was really Venezuela, and Libya have also impacted the my and finally in can you just don't mind from Huish. All exports have had to do the effective demand side on the grade.
Well, obviously all of these positive, but the actual accounted by that but don't have either and we <unk> the RTP.
<unk> I contracted revenue is expected to be accommodation and 79.2 me however in a name.
Well show high 6561 day.
That that open on holding are they giving us a big they keep than they were about $70211 that day, assuming that guided one here I'm just a bit to Dan do you expect it today than you some days open or on floating rate should be 166 me.
We'll go to break it would be really didn't any because no of about 54 million I've got one here I'm shocked at eight.
Slide seven shows our liquidity position I got my hope is what's going on meal and as of December 31st 1090.
Net debt to book.
<unk> is 75.9% without fully funded a growth capex I would do not have any significant that much <unk> on the Q4, two I'd be glad you want.
Slide eight be baby I blended blended cost about.
68, we need pushing off twentytwenty available days.
At the knowledge base. They 19, how how many how does have before though that day.
I thought that cost, which includes operating expenses. They don't next basins and then at least that you've expressed interest expense govdelivery payment is estimated at 18450.
$4, but day I blended Wendy contracted revenue is expected to be at Hamilton and 79.2 me. We have 6000 has kind of this is due on open days and days conducted on floating rate, which gave us a breakeven or should it didn't sound <unk> $211.
But.
At this point, though not done that going over to Mr. that the drop dead. Thank you. When you look again good morning, all please turn to slide.
In December of 2019, Navios Maritime acquisition took delivery of five product tankers. Following the liquidation of Navios Europe, one and.
Position diversified fleet now consists of 46.
Vessels with an average age of 8.7 years totaling 5.7 million deadweight complete consist of 13, Vlccs 10, LR 118, more two or three m. or one product tankers and to chemical tankers three of the Vlccs are bareboat newbuildings are scheduled for delivery in 2020 and 2021.
We.
Turn to slide 11.
Slide 11 details I'd trotting strategy, which we used to balance market opportunity in credit risk, we see protection for market volatility by obtaining charters different iterations in order to better manage markets cyclicality.
2020 about 58.5% of our fleets available days are fixed at a base rate or the base rate plus profit.
Sure and about 10.3% of fixed on floating rate. We continue to monitor this market look the charter out the circa 30, what percent of our fleet that remains open for the year at healthy rates.
Please turn to slide 12, Navios acquisition continues its policy unlocking and secure cash flow with creditworthy Counterparties our fleet has secured.
About 400 million long term contracted revenue.
We continue to extend the coverage of our fleet via new fixtures continuation an exercise optional periods at higher levels in some cases with profit sharing.
Please turn to slide 13.
Slide 13 shows in detail, our current charters with their respective expected.
Expiration dates our chartering strategy revolves around capturing market opportunity also developing dependable cash flow from a diverse group of first class charters.
Please turn to slide 15.
The IMF projected global GDP growth at 3.3% in 2000, 23.4% 2021 is emerging.
As you can developing markets growing at 4.4% of 24.6% in 21 demand structural drivers going forward are historically low VLCC order book, increasing demand from the Asian economies, particularly China, and India and increasingly supply from the Atlantic Basin.
Hi, I'm out of service was scrubber retro.
Fitting will continue to reduce effective yields is usually supply in the near term.
While it is too early to gauge the full impact the Corona virus, our world oil trade economic indicators continue positive initial industry reports for 2020 remain unchanged on the back of the initial response.
Both China and the Internet's it can.
I need to this latest virus outbreak, please turn to slide 16.
Turning to the phase one trade the old China has agreed to by an additional $200 billion in U.S. goods and services over the next two years as compared to 2017 baseline.
$52.4 billion of which is to be in the form of energy imports with.
Half of these unexpected to be U.S. crude oil.
In 2017, China imported about 200000 barrels of U.S. crude daily reports indicate that China will put important additional 500000 barrels in the U.S. crude this year, an additional 800000 barrels per day in 2020.
One.
These quantities are in addition to the 2017 baseline.
Ton miles the movement of crude oil from the U.S. Gulf to China would require about two times as many of the lccs as compared to moving the same amount of crude oil from the Persian Gulf to China.
Please turn to slide 17.
Total of 2000.
19 erected to 12.7 million barrels a day solidifies the U.S. as the world's largest crude oil producer U.S. crude exports averaged 3.3 million barrels per day in the fourth quarter up 16% for the first nine months of 2019 U.S. exported a record 4.5 billion barrels a day during the war.
Last week of December as new pipeline capacity came onstream delivering more light crude to the U.S. Gulf exports. This is positive for ton miles.
Slide 18 fleet.
Tanker fleet utilization expected to reduce over the first half of 2020 due to scrubber retrofitting and associated yard delays.
Assuming 85% of <unk>.
Contracted retrofits occur circa 3% of the crude tanker fleet and about 1.3% of the product tanker fleet will be out of service during this period.
Overall, 3.6% as it the LCC fleet is expected to be out of service due to retrofits, they should tighten vessel availability and support time charter rates.
Please turn to.
Slide 19.
Net fleet growth for 2019 equally and a half percent with 21.1 million deadweight deliveries against 1.8 million deadweight removals projected net fleet growth at 20, 23.8%. We note that while the order book shows 64, Vlccs as of last week there.
There are 146, Vlccs 17 years and age and older but the IMO 2020 at Dallas, where demand is regulations that will lead to some vessel retirements. We believe that the order book in fleet are well balanced.
Turning to slide 21, according to the eye a refinery capacity is expected to increase by.
13.7 million barrels per day from 2019 to 2024, including all additions expansions and upgrades by 74% of that capacity will be added in Asia and the middle East with the <unk> project in China, and other non always CD Asia to increase refinery capacity by 5.2 million barrels per day.
Okay, and 2.1 million barrels per day, respectively.
Turning to slide 22.
You as food production has risen about 150% since the end of 2008, reaching 12.7 million barrels per day in October of this year ice level production since records started 1920.
The U.S. has increased its total product exports by about 500 per site to about 5.75 aspiration for 2000 and for let's turn to slide 23.
10 for 2019 7.1 million barrels per day refinery capacity was taken offline in preparation for increasing product demand associated with IMO 2020.
<unk>.
Now, let's circuit 2 million barrels per day above the five year average for 2020 refinery capacity could rise up to 1 million barrels per day due to a combination of new refinery additions and a significant reduction a refinery maintenance as refineries finally make this historic fuel switch as result of I'm all 2020.
We are seeing some of this effect already in the Atlantic Basin, where product tanker rates have remained elevated since the beginning of the year additional product tanker rates support is expected in the Pacific Once China allows more bunker exports and barges in the near future.
Please turn to slide 24 in 2019 the fleet.
Grew 45% of deliveries of 8.3 million deadweight less 1.2 million deadweight of demolition.
Projected net fleet growth 2020 is about 2.7%.
6.8% of the product tanker fleet is 20 years in Egypt older as of January 1st as this year, there were 172 product tankers on.
Order and 469, which are 17 years of age or older. The total order book is much less than those ships 17 years ago.
I was wondering IMO 2020 rules.
And historically high scrapping prices should encourage elevated scrapping.
Thank you. This concludes my review when it now I'd like to turn the call over to.
During this quarter as for the Q4 financial results Leo.
Hey, good that I will discuss the financial results for the fourth quarter. They get ended December there, especially with wasn't anything. Please turn to slide 26 revenue for Q4 2019 increased by 45.5% to 85.4 million from 58.7 million in Q4.
For 2018, reflecting the Bruce Duncan market and being leased fleet of another supposition following the mezzanine Navios midstream partners that we see sort of byproduct I guess in mid December so the liquidation of Navios Europe one.
In Q4, 2019, who had the 99.4% fleet utilization well see it then.
Other we've been we'll split in 2400, and maybe $4, but they improved from the 15400 and maybe $3, but they achieved in the fourth quarter of 2018.
Time charter revenues expenses of 8.4 million, mainly reflect expenses relating to our vessels football I guess it during the quarter.
Based expenses were 26.5 million Indian expenses were 6 million EBITDA for Q4 2019 increased by more than two times to 45.9 million from 18.5 million in Q4 2018.
Other expenses include WCS went on what they say well 15.6 million.
Interest expense and find the schools blended to medium I said, he's on net debt and explore the quote that was 6.6 million or 44 cents, but said.
Turning to the financial results for the he had ended December 31st 2019, net revenue increased by 49% to 200 that made the point 1 million.
Well my how did it maybe 8 million last year, reflecting a time shot that we've been waiting thousand $248 per day in a 99.6% utilization.
Operating expenses were 107.7 million MCM expenses were 21.7 million.
EBITDA for 2000.
<unk> increased by 170% 228.4 million from 47.6 million in 2018 depreciation on what that is April was 67.9 million net interest expense and finally of course was 91.4 million.
Net loss for 2019 was 65.4 million.
And was negatively affected by set the 2.7 million accelerated amortization of intangible assets column that that amazed want us to Todd this into say 2019, and 7.3 million, but most relating to the say one gives you see in Q3. It just doesn't have been.
Slide 27 provides selected balance data.
As of December that there's 2019.
Yes, and classic we've been not including restricted cash was 44.1 me.
This isn't that the by new was 1.3 billion on both the losses amounted to 1.6 billion total debt as of December that says 2009 beam was 1 billion under 73.1 million.
The resulting to a net debt.
Just one day so 75.9%.
Turning to slide 28, absolutely then of capital to shareholders for the fourth quarter, we declared a dividend or that the centsper share like we've been up to one the $1.20 cents on an annualized basis. The deal then we'd be paid or.
Neighboring seven transatlantic to shareholders on record as we must see 2000, but now I like to pass the call once elite what's your final remarks the leasing.
Thank you.
Well Mike.
<unk>.
<unk>.
If he would like to ask an.
To your question. Please press star one on your telephone keypad.
Your first question comes on line of Chris Wetherbee with Citi.
Hi, this is.
Chris Thanks for taking my question.
So but worse.
First I just want to ask a little bit about your debt maturities and.
20, and 21 and just tell what are your thoughts on in terms of either meeting or being able to roll over some of that that and if a equity issuance could be considered as one of the means for being suppose maturities.
I figured out.
Oh, the both we have almost too yes.
On device and now on the bus data. This is a and then.
But that is part of this solution.
As I said, he said that that that is matching that twentytwenty investors at about 50%.
Loan to filing and now.
We.
I did say that dead, and that's where most of them. So they work anyway.
It would provide additional Scott.
Equity to for any finer.
Oh sure another thing to say to that it don't forget we have as.
Yes.
I mean, what's a good guy determination I mean do he is so you have and they'll dividing that if one got it okay.
Okay.
Uh huh.
Where they could be body and secondly is that got integration of they Oh. This company for the next two here.
Uh huh.
Yeah.
Actually you know we have.
Oh gosh generation.
Well all day.
Blended randys comments like you on all of it.
Almost 100% and that.
Options today.
I see that.
Right right away.
Yes.
Understood. Thank you and I know you said that it's a little bit too early to discuss the impact of the current a virus. Your operations at 2020, but have you seen the virus reduce shipyard capacity at school and slow scrubber installations and if that's the case would.
Do you see a capacity sidelined for sharper installations increase once the virus passes.
You know we've done it.
Hey, good market adopting anyone knows but anyway, they want things that we have seen.
And we had oh some of the.
Got my that's left it does not is it has already booked in.
80, all day.
In <unk>.
D. So what has happened is that a lot of they it there's no spec up I seen a deep.
Depression.
Okay.
Right.
No, it's nearly doubling any work in China that area.
All right.
No one additional question I had thought.
We see it Costco fleet resuming trading are you seeing any negative impacts a.
The the chartering or spot market from scratch.
You know.
Even though this is where I think we need to see whether the market I mean.
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In that sense.
That they feel that the vessels at that gave me some uh huh.
Golf go it was something that is a net he could even be absorbed the goes we have.
We have we at Boston, but.
Lastly on not only the agencies.
Oh Boy, Nate and naturally go so when.
That's a big they leave you'll have a vessels that that outdoor satish about.
So in a house city by fan and auto show a day the realities that we have more lumpy or wait.
Especially movie.
And I believe that the mean.
Double it.
You have almost double that.
That's the needs of gay the same kind of God. So you have that I said fundamentals for the yet you guys see thing then it would position.
No that going on not lives is what creates there has been.
On the show that is that.
The good thing on about situation is that right, we've seen a slowing the rate.
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Slowed down on the situation.
This is a good thing.
What we had a couple of days go.
And maybe lived up to be import and all that.
No.
Yes.
Alright, Thank you very much taking my questions.
Thank you I will now turn the conference over to Angeliki frangou for any additional or closing remarks.
Thank you this complete.
Thank you for.
Maybe in today's conference call you May now disconnect your lines at this time.
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