Q4 2019 Earnings Call
Yesterday from the company, our chairman and CEO Mr., Angeliki Frangou, Chief Financial Officer, Mr. status Sheepish Executive Vice President of pieces to that of money Mr. George I know.
As a reminder, skunk ASCO is being webcast taxes. The webcast. Please go to the fastest section of Navios partners website, Www Dot Navio stashed MMP dot com.
You'll see the webcast link in the they love the page in a copy of the presentation references todays earnings call for schools will also be from there.
Now we review the Safe Harbor statement. This conference call contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 to but not respond.
Forward looking statements statements that tend not to stock effect.
Such forward looking statements based upon the good beliefs and expectations have not as part of mismanagement and subject to numerous material risks and uncertainties, which could cause actual results could differ materially from the forward looking statements such risks are fully discussing Navios Partners' filings Securities Exchange Commission granted.
The company's most recently, yes, the information discussed Sunday school should be understood. This type of such risks on this.
Does not assume and you'll be occasion to update the promotional campaign during this conference call.
The agenda for today's call basis from US first Ms. frangou enough for opening remarks next Mississippi should give an overview and not as Spartans financial results.
Please note this will provide a national update and then into say Oh, Yes, Lastly, we'll open the call to take questions. No tend to go over to now this button as chairman and CEO Mrs. Angeliki Frangou.
She did you think your delays and good morning sort of you'll join us on todays call I am pleased today is onshore the fourth quarter and who is here of 2019.
For the quarter than others, but unless reported 53.7 million over adjusted EBITDA into I did point do meal in adjusted net income and Onpoint 11, Doritos jacked up and they do any.
For the full year of 2019, Navios partners has reported that.
20 million in adjusted EBITDA.
26.9 million in adjusted net income and 2.4 discrete not adjusted earnings per unit.
Dr. Bates midnight bunk sector have recently selected tend to make some googly, where they gave nice high ski feely guardedly around $3000, but they ventures that 2019 average.
$18000 per day, the dry bulk market has been adversely affected by the time news you here and they see it and then said that the caused by the by growing a virus outbreak because the situation is to fluid. We are unable to provide an amendment litigation of the thick.
Well that twentytwenty activity, but we are closely monitoring leaving.
Now this partnership and a D.C. date of 16900, and they do on donor, but day for the fourth quarter and declared a quarterly distribution said this and then you'll need to be presenting it got in keep approximately 10%.
As you can see some slides five and M.M. slate has gone to 48 vessels.
In December 2019, we liquidate and not there's little blank and took ownership of five containerships and.
And then ma'am olmstead this 2.5% or not is my time containers and has a 5% interest in Navios Europe, do which owns 14 vessels.
She said school they need somebody Bhavan, I wish partnership them, yet, but keep in Glasgow, we have significant cash look a baby with about 520 medium and amending contracted revenue is also expected genetics thrown cash flow in twentytwenty equating to about 47 million based on guard.
In todays in about $155 million should that age the gotten to their plenti yet, but additionally, we continue to rewards unit holders within nine UN.
$1.20 cents beta unit distribution represented 10% say dead.
Slide 17 days I listened to the.
Mmm has a strong Q4 was 33.7 million adjusted EBITDA and 12.2 meal in adjusted net income and $1.11 cents.
I'm not asking if you.
We strengthened our balance sheet by successfully any financing a term loan b in October 2019, we have succeeded in reducing our debt by about 25 million on 5% since year end 2018, I hope it's not all of these efforts we have a modest net debt to look up.
Hi, Jason.
End of Q4, Oh said this explained 5% and they favorable debt profile was not that much really I'd be glad btwenty one.
I sleep is well positioned to generate operating cash flow for twentytwenty of about 47 million I've got an today and about 155 million if rates of the Gaba twotwenty yet averages.
And there should be fraud, we expanded the fleet by 11 vessels nine of we have delivered to our fleet.
Slide eight shows operating cash flow come a baby for 22 and do we have 9006 kind of the 79 open days plus days on index linked link charters, which did not only provide us with a low breakeven of $7722 per day that open day, but also in it.
Oh than any opportunity to generate healthy cash flow and a man should generate about 47 million in free cash flow and got a debate and about 155 million your free cash flow equally to the Gaba to dnbi yet average.
230% potential upside.
Slide nine shows have liquidity as of December 31st 2019, well had a total cash of $30.5 million and thought that it boiling a 499 million Donna.
Net debt to become an L.A.'s Asian is a modest 70 615 by said.
Moreover was have not debt maturity until Q4 hundred 2021, and not committed growth capex.
This point I would like to then the gone over to Mr. Stratos Desypris Navios partners CFO, who will take US all these out of the fourth quarter of 2019 single again good morning.
I will briefly to be got on the Luke financial results for the fourth quarter and get into the sympathetic crashed Socialising David.
The second this information is including the peninsulas and summarizing the slide presentation available on the company's website.
Before they start discussing our financial highlights.
You are thinking for certain one off items with at least things like that.
For simplicity, the discussion with the financial results below excluding the effect to one of items listen to be slightly.
Maybe the financial results, while she loves showing slate.
Revenue for the fourth quarter of 2019 years by 3.7 million grew 61.3 million compared to 57 and help them even for Q4 2018.
I think it was mainly due to 8.6, pushing you could easily be things out that if we want to later in the fourth quarter of 2019.
Adjusted EBITDA up wonderful fourth quarter, 2019 increased to 53.7 million compared to 51 million.
For 2018, mainly because I think it isn't that having a discussed above.
Adjusted net income for the quarter among good built great point 2 million.
Operating surplus for the quarter was 21, where you want to make him an fleet utilization from before we're going to keep monitoring beam when was the contribution.
Moving to the drilled one for patients then something meaningfully year decreased by 5.2% to 219.4 million compared to 251.4 million during 2018.
The decrease was mainly due to 4% decreasing the names of it if we went in at seeps into fashion magazine as well as 278, whoever lovely basically yes.
Adjusted EBITDA for 2019 amounted to 120 million compared with 59.1 million luckier problematic.
Good led beacon isn't that everything.
Adjusted net income for 2019 amounted to 26.9 million.
Operating surplus for the yet ended December 31st 2018 was 58.8 million.
Turning to slide 11, I will briefly discuss empty balancing data on December 31st 2000, I can do.
Yes in cash equivalent was 50.4 million.
Long term debt, including get kind of portion was 489 million.
They did to book capitalization was that the 56 and help us until the end of the here.
During 2019, we have completed refinancing Gordon will be and we'll have it do you sort of gross that May 24 point Sevenmillion. Despite 60 and how familiar lead did we conclude in December pullback was this was my message.
Moving to slide when we declared because distribution for the fourth quarter of 2019 50 cents per.
We will look at $1.20 cents per unit on an annual basis.
I've got to bring them to confusion provides for an effective yield of approximately 10% based on Fridays closing price.
The liquidity this February 11, and the payment date distributor only 15% can greatly.
Total cash distributions for the quarter them onto 3.4 million.
Welcome and good it covenants for the quarter than 6.4 times.
Slide 15 chose the details of waterflood.
We have a lots more than divest pleaded with a couple of capacity to 4.9 million deadweight dome and innovative James will be limited yes.
Consist of 48 vessels 14, Capesizes trended panamaxes foretold will have to much missiles and pick one thing that subs.
In Slide 14, you can see the list or fleet with a complex grateful that has picked up expiration dates progressing.
Outside of this coming out what is the main contract duration of approximately two years.
And do you have contracted 7% to 7.1% of one of 11 days, one for southern Brandy, including days, one factor that index linked charters.
The expiration dates extended to 2028.
In slide 15, you can see the details of leverage when payments. This entity will listen there's like in December 2018.
Currently control sprint to nine Containerships Navios partners has affected the didn't occur.
Percent ownership interest individual payments.
I know possible to George Achniotis Executive Vice President of business development to discuss thing that the section George.
Thank you Slathers, please turn to slide 17.
Hi, My forecast quality, the peak growth up 3.2% for 20, 23.4% of 21.
The emerging and developing Asian markets, which drive dry bulk demand are expected to grow our the healthy 5.8% when it Randy and 5.9 presented to anyone.
The dry bulk market experienced an extremely volatile in 2019 with earnings falling to near historical lows in Q1, followed by line here high in Q3.
In the end the average I can't beat the high average of 1353 was identical to last night.
Are those crapper retrofitting tie them tonnage supplies in Q4 slowing Brazilian iron ore exports and year end coal import restrictions in their bodies contributor to the Q4 BTI average underperforming Q3 for the second year in Euro.
While it is too early to go to the full impact of the quarter have iOS on well dry bulk trade.
Economic indicators continue positive initial industry reports remain relatively unaffected on the back of the initial response by both China and international community to these latest outbreak.
And on the current assets of the core don't have iOS Q1, 220 days have been affected by government imposed trade restrictions, which occurred in December and January.
Heavy rains in Brazil, milder weather in China, and our nearly in prolonged Chinese new year.
China's central and local governments Cup promised ease credit and liquidity to injections to stabilize the economy and as he decides the virus.
Let's turn to slide 18.
Phase one of the you'll use China I'd say deal was sign on January 15.
China agreed to by an additional 200 billion of years goods and services over the next two years compared to 2017 baseline and that is the China would double with aggregate draw imports from the 2017 base by buying at least an additional 12 and a half a billion Mtwenty and then 90 minute.
Beginning 21.
At the heart benches of U.S. D wood, and wood products as well as cone I listed within the manufactured goods and magic categories in disagreement.
Turning to slide 19.
Before turning to Andy will dry bulk demand for the three major cargoes of iron ore coal and grain is forecast broad based 2019 by almost 2% or about 64 million times.
This increase is led by I don't know, which is expected to grow by 2.6% or 38 million times.
Much of which will come from Brazil, adding two times.
At the same time the supply of results expected to reduce as this is our retrofitted with scrubbers slow steaming continues and some of the older bureaus. He's come out of service about 6.5% of the Capesize fleet is expected to be out of service in Calatlantic before taking into account scrapping.
Given current supply and demand forecast the fundamentals going forward remained positive.
Turning to slide 20.
Chinese steel production growth was up 8% to 29 pm.
Chinese steel exports continue to be strong due to large infrastructure projects outside China.
The belt enrolled initiative remains the cornerstone of Chinese economic plans for the next few years supporting still in power demand domestically and abroad.
The Chinese government continues to stimulate the economy with large infrastructure projects, resulting in a 9% increase in international consumption through 2019.
Jamie you still means have reduced IRI iron ore stockpiles by about 5 million times between June 2018 in mid January 2020.
Additionally, billability vital known in the second half 2019, she mess with China held steady year on year end stockpiles have been increasing since July.
The replenishment of the stockpile is expected to continue through 220 driving demand for Capesize vessels.
Please turn to slide 21.
Demand for coal in Asia remains strong.
Npis expected surpass China is the largest importer of cone and 2020.
Coal imports to India are expected to be up 7% Nineninety.
India and domestic coal struggles to overcome logistics issues in past coal imports I expected to remain strong.
Chinese seaborne coal imports increased by 8% to 92019.
Chinese coal imports caught us severely restricted to separate imports. This kind of ever has increased estimates for this first half 2020 imports.
Tend to slide 22.
Worldwide grain trade has been growing by 5.2% cognition is 2008, mainly driven by Asian demand.
The trade war between the years in China affected this low grants in 2019 as the Chinese tend to South America for an additional imports. However, as previously mentioned the phase one three d. is encouraging for us grain exports and dry bulk shipping over all.
Forecast for large grain harvest in South America, Russia, and Ukraine will promote export sales going forward the south American crops. These guys have been plentiful and farmers continue to export in large quantities.
Moving to slide 23, net fleet growth was 3.9% 20 910. The current order book is 9.1% of the fleet, which is historically low newbuilding contract team was done in 2019 by about 50% of form 20-F, 18 levels. Accordingly, net fleet growth is expected to remain low going forward.
Yeah.
Tend to slide 24.
This is over 20 years of age and about 8% of the total fleet, which compares favorably with a previously management record low order book.
Well that plenty 19, scrapping was 7.9 million times about 70% higher than 2018.
The added costs of we comply with higher more regulations for ballast water treatment systems and fuel regulations are expected to result is high scrapping going forward.
If we don't feel overseas are also expected to remain removed from the fleet this year as their contracts and.
Additionally, fleet efficiency is expected to reduce expenses are retrofitted with scrappers.
Assuming the remaining retrofits or carry into those tentwenty.
About <unk>, 0.7% of the toward that fleet and approximately 1.4% of the Capesize fleet is expected to be out of service.
If I did it actually adding capacity of about 3% of the fleet could occur if current speed restrictions continues throughout the rest of the year.
In conclusion positive supply and demand fundamentals, along with reduced split efficiency caused by the IMO tiny trendy and they've yellow see phase out.
Could provide significant support to the drybulk market going forward.
This concludes my presentation I would now like to turn the call Arbitron, California final comments.
Thank you.
<unk>.
The cold.
If you like to ask an audio question. Please press star one on your telephone keypad.
First question comes from a line of Chris Wetherbee with Citi.
Okay.
First on the balance sheet, maybe understand what we think.
2020 in terms of.
Meaningful opportunity there.
First call on.
Sure this year.
Good morning.
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For that.
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No.
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Great.
That.
Yeah.
No.
Cash flow.
Yes.
Environment.
47.
Looking ahead.
Yes.
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What you have.
Maturity.
Now extended.
No.
And then low breakeven.
Well.
Of course.
Mike.
Well the market.
Okay.
Right.
Hi.
Yeah.
Yeah.
Good.
Growth of about 2%.
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3.9.
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Today.
Yeah.
The.
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Doug.
Good day.
No.
Okay.
I want to make sure I understood.
Do you expect that.
Where we get some clarity.
That's something that could happen.
So maybe.
The lingering around.
I understand I guess.
Here is that something that can be executed on it.
Okay.
Clarity.
You know.
Good.
Bulk commodities.
Definitely.
Okay great.
That should be.
As we move too.
Marty I think that will happen automatically as well.
Core.
No because.
Okay.
Right.
You know more.
Really.
I think that.
Yes.
So.
Got it.
And then them onto the condition.
Okay last question I, just wanted to get a sense.
From a fleet perspective.
And your priorities for 2020 in terms of.
Assets that maybe.
I'm trying to monetize or do you think it's probably better too.
You know potentially look for opportunities like you said you don't have the maturities.
Your next year that spread out.
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There are some cash flow generation.
Right now.
Do you think buyer or seller at this point.
C.
I think that we will always.
You know, we always say sounds.
This is enough.
Well, we're never going to stop.
And if we find opportunities.
A follow but.
Hey, that's.
Absolutely.
But these are constantly new on fleet that Scott.
Bye.
The way.
We are doing it.
What.
I will say that they finally find very important.
Let me read.
Basically I mean.
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The point of view lowly levered.
How much we do know breakeven that a lot of option.
Great well have to me good.
But.
Your next.
We can have to he isn't at all.
Black Black.
Yeah, we have been cut on that right.
I think on these kind of an environment.
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Okay. Okay. That's very helpful. Thanks, very much for kind of I appreciate it.
Your next question comes from the line of Randy Gibbons with Jefferies.
How to answer leaking team how are you.
Good morning.
Got it gets a quick question you mentioned in a little bit.
A few minutes ago, but.
No. That's a term loan b, obviously that refinancing is complete your balance sheets in good shape.
Any appetite for unit repurchases, you know say are trading at a massive discount any v. and yielding more than 10% currently.
Well.
That them and we have.
Then.
And now.
Yes.
But we of course.
In front of.
So we are mindful.
Okay.
Dividend policy.
But of course, we need to.
He sees how.
These major event.
Right.
And how that got.
Okay.
Sure.
And then and then with that kind of uncertainty you have some vessels coming off of charter here.
In February April so other drybulk vessels.
You look into just recharter those at one plus years, and just kind of continue to roll time charters or operate those in the spot market for awhile.
You know, we're using a me some of them were going for one.
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Doing in that space.
We've done that.
Bases.
The combination of sometimes you do a yield better.
I'm doing spot market, so depending on the on the position, especially one.
The environment.
He is I'm knocking on their daily spot market.
Right.
All right and then I guess last question for me what are your plans for the container ships you purchased five.
Navios Europe, one so obviously, you know and a five minute medium size in five smaller ones.
[music] playing on keeping these longer term or the is the plan to just sell them to NMC I once they have enough capital by them. Maybe later this year.
They need their time long term.
No.
This is Bob.
The companys.
We have now that they want just got from now.
It's not that the company.
Fine.
So you're going to market.
Bob.
Okay.
Make sure slate.
Got it.
Awesome well that's it for me. Thank you so much.
Thank you.
At this time I would like to turn the floor backed angeliki frangou for any additional or closing remark.
Thank you.
Gordon.
Thank you for participating in today's conference call. You May now disconnect your lines at this time.
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