Q4 2019 Earnings Call
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Thank you for joining us for Navios Maritime Holdings fourth quarter full year 2019 earnings conference call with taking the company or chairman and CEO Angeliki Frangou, Chief Financial Officer, George Achniotis, Vice Chairman, Ted Petrone VP of strategic planning Yunus carrier.
This conference call is being webcast to access the webcast. Please go to investors section of Navios Maritime Holdings website at Www Dot Navios Dot com.
Webcast Lincoln to know the page in a copy of the presentation reference in today's earnings conference call can also be found there now I'd like to review the Safe Harbor statement. This conference call could contain forward looking statements are meeting of the private Securities Litigation Reform Act 1995, Navios Holdings Forwardlooking statements are statement that knock historical facts such forward looking statement.
Based upon the current beliefs and expectations of Navios Holdings management, that's subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements such risks I'm afraid I, just got Navios holdings filings with the Securities and Exchange Commission information said, what herein should be understood in light of Petrus Navios Holdings does not assume any obligation to update the information contained in this call.
This call.
I will begin this morning's conference call with formal remarks, the management team and after opening the call for questions now I turn the call over to Navios Holdings, Chairman and CEO Angeliki Frangou Angeliki thinking on good morning tone of who joined US on todays call I'm pleased with those house well the fourth quarter full year 2009 theme for the fourth quarter.
It was a nice Dino reported revenue.
My $18.9 million in adjusted EBITDA seven to 4.7 million in adjusted net income 19th one for me.
If we get of 2019, we reported revenue $482.4 million.
But let me kind of $3.8 million in adjusted net income of $53.9 million.
Operating the dry bulk market how depressed due to this is an idea and uncertainty related to the going on of why we anticipate gone through new weakness. The first Oh Twentytwenty with go acceleration in the second half of that yet I know youve done more we do that nobody market.
Yes. He lives in <unk> group, we gone well most Dupont invesco, so for public listed companies and do investment.
On slide four we focus will not be into five group turning first to South America. The Bush books remained excellent the company said by handling the limit but down for 2019.
The board business is.
On the news to grow we also pursue other opportunities including.
That's hitting that an anomaly that bought facility in but he.
Now this black Knight should enjoy strong cash flow with about I found that then to mean contracted that every new loan and low leverage that'd be 6.5% net debt to capitalization Navitaire containers, Oakland Dana's hope entity also has conservative leverage.
<unk> newsweek's, well the first quarter of Twentytwenty <unk> weakness.
No I wish I could you know I get a banking company that's been operating no no, but not that eight environment, while the well know how that's going to guide and weakness, we believe that long term prospects remain robot.
Slide five guys are they seem to vary.
As an update to our balance it seems that yearend 2018, and then they do a shortened badly by about $95 million and knock them they agreed by $82 million.
We have also been I do meeting during.
The fourth quarter, we acquired rashes was include the Capesize vessels.
That we acquired so the exercise of favorable batches option into comps I'm aggressive under bareboat movies that had been believe it was sleep.
The average age of the workforce solutions was 2.2 years.
We also sold to deal with older vessels with an average age of 17.3 years for 23.6 million in girl Shaves. Bush's was include expected insurance gosh, it's not <unk> I mentioned I think that's going to monetize Navios Europe, one in December 2019, which actually.
As for me liquidated. This that we use that had been point for me looming gasunie, she pretty big that.
In addition that included in that we'll have four to 4.3 mean MVC rubley due from others get up to now there's good enough into denominated and actually go city 20 to 21.
Slide six <unk>, Oh doing it difficult period when you enter that's one thing as you can see from the bought them well. This not only one is doing the five he had been did they BTI equaled or exceeded that Randy yet.
Yes, we need to maintain navidea.
The age of about nine here.
In addition, because from the fleet by increasing the opposite Sigal my pleasure over.
Overall will have the same day. They don't go by the way it would have five you had aggressive.
We had yesterdays news out by thinking a condiment segment by almost 70% and encouraged by not engaged I segment.
I think they said I am most days that even in difficult market breach, we seek to monitor not would become controlled ample she's when I said for an eventual markets recover.
Slide seven as you can see we expect the markedly Gaba during the second half Duncan 20.
As I noted I mean, they've got their market has been severely box bases will not be into a musky do extend it going on a five but the significant giacco need recalibrate is expected in the second half was going to play out.
As you guys see from the job on the bottom out of this night that by the here <unk> index, that's been going she's going to tie in this cycle huh fascist too long over the same here.
As you shift from the job on the bottom of that I definitely for the cycle cobblestone between reflects a disproportion upside versus ly over here to date, they bought because I see.
Well the second half of study 23 times, the beady eye in Big Sports right and we are well positioned to any of the benefit each of these expected today to the guy They threw out a 14009 Cogs in 94 open in index linked the slide eight how nice only.
<unk> net debt to book and as usual.
86.2 person, who had gosh 78.7 mean I don't know as of December 31st 2019.
We have no significant go maybe seeping go up but we also have no material that much way. These have been vineyard Twentytwenty do subs. It was October when do you on twentytwenty on bringing much we'd be over 11 month or the bus and bone.
I would like mounted on the going over to Mr., George I know, there's no other scalding fearful George.
Thank you again, please turn to slide nine for any view of the Q4 in the full year financial highlights.
I'd like to point out that full comparability purposes. There's also Q4 and a full year 2019, and 18 exclude the effect of the closely base Navios containers from November 2018 to August <unk> 2019.
EBITDA and net income for the fourth quarter of 2019, when adjusted to exclude the hundred 30.6 million impairment losses relating to dry bulk vessels.
Net income for the fourth quarter will be Tim what adjusted to exclude that happened, maybe 4.6 million impairment losses, let him to dry bulk vessels 55, and a half million impairment on our investment in Navios partners and 58.3 million.
Gain from the course revision of Navios containers.
Adjusting for the above EBITDA for the quarter increased by 64 person to about 75 million compared to 46 million in ATM.
The increase in adjusted EBITDA is mainly attributable to talk about 22 million increase in the equity pickup affiliates, mainly due to the improving the tanker sector is 70% increase in baby Dove, Navios, South American energy sticks, and 13.7 million gain from the repairs as far bonds.
Adjusted net income for the Gord, there was 19.4 million.
Parents want adjusted net loss of 19.7 million ATM.
The increase is mainly due to the increasing adjusted EBITDA in about 5 million decreasing depreciation amortization.
In addition to the items that affected the Q4 he be done net income the full year. He is on swirls adjusted to exclude 26 million in 16 million losses from the sale of variable residencies earlier in the years 2019 in 18, respectively.
About 62 million net loss from that of course, what abysmal I guess one Dennis.
About 24 million impairment, providing best main navios acquisition and rental for intangibles in Irish acquisition.
Adjusted EBITDA for the year increase by almost 70% to about 304 million for my husband 80 million in okay. Yeah.
The increase not drastically because I was mainly attributable to 710% increase in baby Dove, Navios South American logistics.
About 40 million, increasing the equity pick up from affiliates and 41 million increase game from day batches of our bonds.
Adjusted net income for named English 54 million compared to adjusted net loss of seven to 1.6 million made him.
The improvement was mainly due to the increasing adjusted EBITA and an 18 million on decrease in depreciation amortization, mainly due to the sale or older vessels.
Moving to slide 10, and our balance sheet highlights.
At December 31st 2019, we had 78.7 million in cash compared to 150.8 million on December 31st 2018.
I would like to remind you that their 2018 balance includes 90 million of Navios containers.
In Q4, we use 19.3 million enough cash to the parents about 53 million nominal value of the ship mortgage loans June 20 train two.
Since the beginning of the year Woody patients, who have a 16.7 million nominal my yoga launch for 68.3 million.
I would like to point out doesn't have no significant committed growth capex and no significant debt maturities until 2022.
Over the next slides I will briefly review our affiliates.
Please turn to slide 11.
Navios holdings owns a tend to have personal navios partners.
Navios partners launch of little 48 vessels that the Drybulk and container ships.
Mmm also owns about 4% of another's containers.
Following their unwinding of Navios Europe was an M. includes fleet by taking over the five containerships that belong to Europe one.
The company generated significant cash over the past few years, which was used to refinance this term loan b and delivered its balance sheet.
We expect to receive about 20 half me, having cash dividends from and I remember annually and since 1008 were received about 200 million in dividends.
Thanks, Slide 12, Navios holdings owns about 31% of Navios acquisition and an eight has a fleet of 46 tankers, including 30 MBS disease.
Following that he covering the tanker market the company's adjusted EBITDA grew by more than 2.3 times 12 of 132 million compared to 57 million 18.
And then they took over five product tankers after the unwinding of Navios Euro bond.
Where do you see if the about 6 million dividends from an M&A during 2019 and since 2011, we saved about 94.2 million in dividends.
Moving to slide 13.
Navios holdings owns about 4% of Navios containers, and M.C. I sort of fleet or 29 Containerships. The company was established nearly 2017 levers that weakness in the containership censtar and scaled up it's fairly quickly and efficiently seems December of 2018 Navios container ship.
I was hoping trading on the NASDAQ Global select market now we turned the corner over the I'm just kind of good is for his review of the Navios South American logistics is that's.
Slide 14 provides an overview of their navios logistics business.
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Today, two thirds of already that you generate from the important segment.
We expect our fourth pieces to grow.
If I look at you would get back was we reported housekeeping Michael goes with the so I see the proposing we've got good dialogue as you can get companies or not but basically what are your customer base of grain exports.
Sorry, we import whereas.
Other growth opportunities for the company.
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Please turn to basically.
In the fourth quarter, because it I'd be exactly split 1% 91 days, New York Brlsixteen point for me doing the same be against you.
Q4, 2000, I'd be booked segment EBITDA ustwenty, 8% to 17.7 million Big piece was a BBB I spoke with her great definitely why are they do something very popular.
This will be production from last years.
The first thought it is known iron aren't they.
Hi moved why wouldn't give me that doesn't mean it does that work.
It would certainly be we're going to be 1.1 dollar 40 is only be.
He is actually higher approximately 82 best.
When comparing the second samples to suddenly the into the same period in 2018.
As a reminder, regardless of actually hold them, we have been Andre what at least for me O'donnell.
In the bulk segment Q4, 2018, EBITDA 0.4 million from 0.8, meaning the same deal yet yeah.
Or you just seasonally norbord reported its a slippage.
I was just basic important southern European maybe though was 1.6 million.
James compared who is going be here this year.
For Q4 2019, net income was 2.8 million compared to 2.8 million net loss in the San Diego, Yes.
The increase is mainly attributable to the improved operating performance within all obviously.
Turning to the financial results for the fiscal year <unk> revenue increased 10% to 228 points in New York every bankers, 28% to accommodate the people nine New York and net income increased 368.
The second 2.1, New York from 6.9 million this year.
We had strong and go in northeast.
Please turn to slide 16, Navios logistics goes on policy.
At the end up accordingly, he was 45.6 million.
They have to book.
56% Entrees compares yet I suppose maybe.
I was now right, there's a quote offer.
For the industry Leo.
Turning to slide 17, Slide 17 presents our diversified Drybulk fleet, consisting of 53 Drybulk vessels totaling 5.7 million deadweight 17 case 20, Panamaxes six supramaxes into Handysize, we continue to be one of the largest U.S. Drybulk list at least established over 65 years ago.
Rich stage of the fleet to 7.5 years, 26% younger than the industry.
Yeah. This group total fleet 198 vessels includes 98 Drybulk.
54 tankers and 46 container.
Now this is a highly diversified public shipping company.
Please turn to slide 19, I know forecast world GDP growth at 3.3% for 20, 23.4% for 2021.
Emerging developing Asian markets is drive travel demand are expected to grow at a healthy 5.8% 20, 25.9% 2021.
Developed market experienced an extremely volatile 2019 with earnings falling to near historical lows in the first quarter, followed by a nine year high in the third quarter and then the and you'll be I average of 13 to Q3 was it deneke <unk> to 2018.
Those scrubber retrofitting tight intensified in the fourth quarter slowing Brazilian iron ore exports and your and coal import restrictions in the far east contributed to the fourth quarter VDI average underperforming Q3 for the second here in a row.
Well, it's too early to gauge the full impact to the Corona virus on a world Drybulk trade. This whole industry reports for the fully here remain relatively unaffected on the back of the response by both China and the international community to the latest outbreak.
Other than the current affects other Corona virus you wanted this year or rates have been affected by government imposed trade restrictions, which occurred in December and January heavy rains in Brazil cycle Damian in Australia.
Whether in China, and early and prolonged Chinese new year holiday.
Hey, central and local governments have promised ease credit liquidity injections to stabilize the economy as its five virus.
Please turn to slide 20.
He is one of the new U.S., China trade deal with size on January 15, China agreed to by an additional 200 billion of U.S. goods and services over the next two years compared to the 2017 baseline.
Under the steel China with double U.S., agriculture, and what's the 2017 base by buying at least an additional 12.5 billion and 2020.
19.5 billion 2021.
Additional purchases of U.S. deal wall, and wood products as well as coal as listed within the manufactured goods and energy category and this agreement.
Slide 21 please.
For 2020, Drybulk demand for the three major cargoes of iron ore coal and grain is forecast to outpace 2019 by 2% or about 64 million metric tons.
Increases led by Iowa, which is expected to grow by 2.6% or about 38 million metric tons, which most of which will come from Brazil, adding that ton miles.
The same time in supply of vessels is expected to reduce as vessel that retrofitted with scrubbers slow steaming continues and some of the older Vlccs come out of service.
About 6.1% or the Capesize fleet is expected to be had a service in 2020 before taking into account scrapping.
During the current supply and demand forecast the fundamentals going forward to be positive.
Turning to slide 22, Chinese steel production growth was up 8% in 2019.
Chinese steel exports continue to be strong did a lot destruction projects outside China belt and wrote initiative remains a cornerstone of Chinese economic plan for the next few years supporting steel in housing demand domestically and abroad.
The Chinese government continues to stimulate the economy with large infrastructure projects, resulting in a 9% increase internal fuel consumptions you through 2018.
Chinese steel mills have reduced their iron ore stockpiles by about 31 million times between June 18, It really type later this year with additional availability of iron ore in the second half of 19 shipments to China held steady year on year as I always have been increasing says July.
I must be on the stockpiles is expected to continue throughout 2020 driving demand for capesize vessels.
Turning to slide 23.
So on Asia remains strong in the is expected to surpass China has lost importer of call. It 2020.
Coal imports to India were up 7% in 2019.
In the domestic coal struggles to overcome logistics. This isn't that coal imports are expected to remain strong.
Hey, seaborne coal imports increased by 8% in 2019 Chinese coal import quotas severely restricted December imports. This however has increased import estimates for the balance of 2020.
Turning to slide 24 worldwide grain trade has been growing by 4.9% CAGR since 2008, mainly driven by Asian demand.
The trade war between the U.S. and try to affect the flow grain in 2019 of the Chinese turned to South America for additional imports. However, as previously mentioned the phase one trade deal is encouraging for us grain imports and Drybulk shipping overall.
Turning to slide 25, net fleet growth was about 3.9% in 2019 is expected to be about 7% 20 twond.
All right Orderbook is 9.1% of the fleet, which has historically low newbuilding contracting was down in 2019 by about 45% for 2018 level.
The only net fleet growth is expected to remain low going forward.
Turning to slide 26 vessels over 20 years of aid or about 7.77 total fleet was compares favorably with a previously mentioned record low order book.
Total 2019, scrapping was 8 million deadweight tons over 70% higher than 2018.
Last week through last week scrapping totaled 3.7 million deadweight ton of approximately 375% year on year.
Added cost to comply with IMO regulations for ballast water treatment systems and fuel regulations are expected to result in high scrapping going forward.
The fleet as yellow sees that are expected to be removed from the fleet. This year as a good contract as.
Peter This is expected to reduce the vessels are retrofitted scrubbers.
Assuming the remaining retrofits occur in 2020 about 0.7% total fleet at approximately 1.4% of the Capesize fleet is expected to be at a service.
There is actually the capacity of about 3% of the fleet could occur current speed reductions continue through the rest of this year.
Additionally, the car took a run of Iris may reduce 2020 fleet efficiency by extending retrofit duration as well as pushing out a portion of new building deliveries into 2021.
In conclusion other supply demand fundamentals, along with reduced fleet efficiency caused by about 2020 and deal obviously phase out should provide significant support for the drybulk market going forward.
This concludes my presentation I'd now like to turn the call over the edge looking for final comments annually.
No.
This completes our Afirma <unk>.
Ladies and gentlemen, if he would like to ask your question. Please press star one on your Touchtone phone.
And presenters Oh, we have no question. So we will now I'll turn it back to Ms. Frangou.
I think you'll be said Oh please.
I'd say the rates if you on a no because of this is a nice in the Corona virus that that we anticipate that the second.
So supply demand dynamics and.
And that global girls, we see that.
Indicative today as I say, they said well and how we're going to have a are they.
Games spot market being even as it stands diet.
Thank you.
This concludes today's conference call you may now disconnect.
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