Q1 2020 Earnings Call
Development, Mr. Georgia no.
As a reminder, this conference call is being webcast boxes to I guess this coach in the that's a section of Navios partners website.
Do you W. W. Not navios dash and not be don't call you will see the webcast link in the middle of the beach and a copy of the presentation referenced in todays earnings conference call well So the foundation.
No I wonder if you the safe Harbor statement.
This conference call could contain forward looking statements within the meaning of the private Securities Litigation Reform Act 1995, but not the spot.
Forward looking statements.
They tend to not historical fact, such forward looking statements are based upon current beliefs and expectations. I was part of this management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward looking statements.
Such risks.
Well in this cost in Navios partners' filings with the Securities and Exchange Commission.
The information set but he should be understood. The line such risks Navios partners does not assume any obligation to update people nation contained in this conference call.
[music] the agenda for today's call is as follows first is fundamental for opening remarks.
Next Mississippi, which will give an overview of Navios partners financial results, then mr. rationale discrete provide an operational update and then need to say overview and see we'll open the go to take questions.
No I turned the corner, we cannot as partners chairman and CEO with Centurylink examples they could delay some good morning thought of he'll join us on today's call is why they can money. They didn't tonight is caused by the but there has been hot baking. We have also been strengthened by that got us and compassion of that first responder, but degree that many.
Dedicated healthcare workers.
And then it given time aggressive schedule that thousand people.
I think these people are safe and these lessons moving deemed and now I don't think Gandhi with ever changing rose and does it requires a maybe it input on Monday disappear.
I am proud the members with an average family.
I've been Sean I didn't know what do they see us doing this unprecedented time of uncertainty and we have taken the necessary measures glassware save deal what people want keeping I sleep functioning.
I am pleased with days also for the first quarter of Twentytwenty.
For the first quarter than others brothers imported 46.5 million of revenue and 19.1 million of adjusted EBITDA. We also declared a quarterly distribution of 30 cents per unit, representing a garden held approximately 17%.
By governments have injected unprecedented amount of liquidity into that economy to kind of they slowed down in economic activity cost, but about them.
To date about 16.5 studying that they might have been announced.
Despite these the pandemics negatively affect on global economic activity can be seen in the do it Asian or was it down and then into not the right you have to date Twentytwenty. They gave Jive is five to see an eight is averaging around $5300 per day.
This is a 70% less than that 2019 average $18000.
However, expecting Eddy county in the second half of Twentytwenty as the competition much from guaranteeing any dental normalize ways of doing business. We expect this normalization who didn't do they need for denied by God.
As you can see from slide five and then Mems slate is now 48 basis in December 2019, we liquidated Navios Europe, one and then Mems gun in my time investment I said, this 3.5% and they they're not lose my time container and that type of thing in the.
Navios Europe to which we expect to be we debuted in Q2.
Slide six you've got here why we believe that Novitas partner is a plan yet I bought had been club so well have a strong boxes and all of it we have reduced gross debt by 3% compared to he had in 2019. We also have not that much who it is and they give us any of Twentytwenty line and that's I believe.
Committed growth Capex requirement.
We'll have got look up a babies with about $498 million any many contracted revenue.
Blended Randy about 62% about 16008 counter that said this is available in base I fixed I've been nava mentally oh that didn't thousand it sounded a 78 no less but they.
This does created and Monetizable breakeven or 8700, and then dollar that day bed open day.
Slide seven depends upon dynamic embarked on global trade data medical jet they present degrees in blended blended globally to be mostly driven by 6.1 bus and began I'm in that <unk> economy.
He's not all that is absent those I wanted to economic activity that I bought than it is expected to contract by 3.6 person into N. P 20.
We may have faith much of these negative impact in Q1, and so far in Q2 I got this objective exit extended blocked out.
Looking for work economies as well objected to recover in the second half Twentytwenty and denied by grade is projected to increase by 4.3% Mtwenty two end do you want.
Moreover, global GDP is expected to increase by 5.8% in Twentytwenty line, which we would expect to be beneficiary for die by market.
Hi, David days, a dynamic somebody bond and commodity grade and thinking supply of the game show I fully expect it can they said on top of Twentytwenty demand for the three major by God goes I don't know coal and grain I forgot the blood, but out based demand that first half of twentytwenty by about <unk>.
Got $42 million or 8.9%.
This demand is led by a knowledge will just wanted to grow by 14.1%.
This growth should be objects from that perspective of it so they get globally Capesize fleet net fleet growth Twentytwenty. He had to date is negative 1%.
Caused by accelerating known day rates and scrapping of vessels alongside violence announcement of phasing out of 25 years old She vessel slide nine shows how nm member has weathered the storm during the ongoing market is an option.
For the first quarter, we generated 19.1 meal in adjusted EBITDA, and and time charter equivalent at 810007, founder and $17 per day.
Their faces <unk> long term provide protection against the ongoing market downturn, we have 61.6% or what they squeaks for twentytwenty and they maintain open days provide us with a breakeven of $8710 that day.
We continue to de lever I bought a heat and reduce our girls that by 13.5 million in that first quarter.
Net debt to book up then they have done a 37.4% and we have no significant majority and they give us any of 2021.
We expect to liquidate Navios Europe do in the second quarter of Twentytwenty will receive 17.3 million in that form of the volume okay.
Slide 10 to date have cost an actual for the remaining nine months of Twentytwenty, 61.6% overnight available days I see the novelty do they have 13008 continent $78 per day I.
6460 feet open plan index linked based not only provide them with a breakeven of $8710 that open day, but also allow us to generate seven Amelia I've got it right.
Slide 11 shows and liquidity I.
As of March 31st Twentytwenty, we had doubled guy that the 1.1 million and thought I bought and a 476.1 million and net debt to capitalization is 37.4% and it will have no debt maturities until two city of 22 into.
And not significant committed growth capex.
At this point I would like to down the goal to start those Desypris Navios partners CFO, who will take a civil days onshore that fair sport thinker Gilligan good morning.
I will briefly review our unaudited financial results for the first quarter that as much the depression 2000 Wendy.
Financial information is included in the President and you summarized in the slide presentation available on the company's website.
Before I start discussing opines on financial highlights I would like to draw your attention because certain one off items other leases and slight growth.
Simplicity, the discussion with the financial results below exclude the effect of the one off items listed and dislike.
Moving to the free and that's what it was also strong misled grill.
Revenue from the first quarter 220 was almost the same as last year and amongst the four to 600 million compared to 46.8 million for two until 2019.
Our revenue was affected by either you can 0.9% degrees in that things are going to people in many countries in the first quarter of 2020, which was the first quarter totaling deal.
The decrease was mitigated by the 25% increasing the available days on the clip.
Adjusted to be Defilippis quarterly 2000, granting decreased to 19.1 million compared to 92.7 million for the first quarter 2019.
The main digital for the decrease was a 5.6 million increase in management fees, mainly due to our lives. It believes.
This increase was mitigated by 1.7 million increase Nick would deal with your net neutral fibers when things.
Adjusted net loss for the quarter amounted to 3.8 million.
Operating surplus for the quarter was 4.4 million.
I believe utilization for the first quarter of 2000 grant it was almost 98%.
Turning to slide 15, I will briefly discuss on cable answered data as of much that's across 2020.
Cash and cash if we're willing to what we're supposed to 1.1 million.
Long term debt, including the current portion was 476.1 million.
Net debt to capitalization was 7.4% of the in over the quarter.
Moving to slide 14, we declared because distribution for the first one of the upfront Brandy open up the cents per unit.
I will go live in distribution provides for an effective yield of approximately seven didn't help us and based on yesterdays closing price.
Medical date was May 11, two in 2020 and the payment date, because may 14, Southern England.
Bottle does distributions for the quarter them, among the 3.4 million.
Our common unit coverage for the quarter is 103 times.
Slide 15 chose the details of on clean.
We have a lots more than double split with a total capacity to 4.9 million deadweight bullish and another its age of 10.9 years.
Flip courses Fortyg divisions within Capesizes going to Panamaxes for older handy much and 10 Containerships.
Slide 16, you can see the list of our fleet with the complexity of some of the respective expiration dates but the rest.
Our charters have another is the remaining contract duration of approximately two years.
Currently we have contracted 84.6% of all available days for 2020, including days Complected index linked charters.
Expiration dates extends to 2028.
Slide 17, you can see the details of Navios containers.
This entity was listed on NASDAQ in December 2018 currently it concludes 29, Containerships mothers partners, particularly in to help us and all the Supreme dentist elaborate on things.
I now pass the call to George Achniotis Executive Vice President business development to because the Mr. central.
Thank you silos, please turn to slide 19.
With the entire globe affected by the pandemic Wonder quantum is were severely constrained as governments put confinement guidelines in place, enabling the IMF project global GDP contraction of 3% for 2020 led by 6.1% contraction in advanced economies.
Our men's have put in place unprecedented emergency monetary and fiscal plans to support their economies since our banks have embarked on a huge monetize stimulus programs in light of these them with projects, 5.8% global GDP growth in 2021.
Q2 is expected to be the lowest point in the contraction we should begin to see this answer the measures taken from Q3 onwards.
So he's out of the Abbas seaborne dry bulk trade is projected to contract by 3.6% 2020 and grow by 4.3% in 2021.
For the second half of 2020 robust demand for the remainder of cargoes of iron ore coal and grain is forecast to outpace the first half by about 9%.
These increases led by iron ore, which is expected to grow by about 14% Cort 100 million times matter, which will come from Brazil, adding to ton miles.
Turning to slide 20.
Chinese iron ore imports fell slightly last year by 1%, but are expected to increase by 2% in 2020 to 1000 68 million times, despite the locked down in China, and Taiwan iron ore imports increased by about 1% compared to Q1 19.
Chinese steel mills have reduced their iron ore stockpiles by about 49 million times between June 20.
18, and April 20 transition.
Without additional availability of iron ore in the second half of trying to Andy shipments from Brazil, and Australia to China are expected to increase by about 45 million tons per quarter is telling me so plenty stock price driving demand for capesize vessels.
The Chinese fiscal stimulus should support seed production and intend dry bulk trade going forward.
Moving to slide 21, the combination of the worldwide locked down due to their pandemic and there's significant robbing advisor boy has resulted in reduced coal trade Asian coal imports, which accounted for over 80% of their world seaborne trade are expected to decrease in 2020 by 3.1%, but Inc.
This by 2.6% anyone.
This is actually has added pressure on this monetize vessel.
Which has been partially offset by increased demand for grains discussed wonderful looks like.
Slide 22 worldwide grain trade has been growing by approximately 5% CAGR since 2008, mainly driven by Asian demand.
I never increasing world population as well is increasing prodding demand worldwide continues to support the global grain trade.
With a pandemic disruptions, causing many migraine paid disruptions the international grain council projects that could ship pencil wheat, corn and soybean for the 20 trendy crop year.
Please turn to slide 23.
The current order book is just over 8% of the fleet, which is historically low newbuilding contracting has collapsed in year two days down by about 80% compared to 2019.
In the aftermath of that pandemic outbreak the peso non deliveries I think is dramatically.
After near normal deliveries in January the average of non deliveries from February its way breed was about 26%. These cuts resulted in year today non deliveries of 18%.
Accordingly, net fleet growth is expected to remain low at about 2% for gaining traction.
We also note that falling violence announcement for the phase out of 25 year losses. The Capesize net fleet is expected to be minimal at below 1%.
Turning to slide 24.
So for over 20 years of age are about 7% of that without fleet, which compares favorably with the previously mentioned the record low order book.
Scrapping here today is 7 million times on 86% of the total for the whole of 2019.
Current lead you to their pandemic locked down in southeast Asia.
There is a temporary held on scrapping once the kind of restrictions are lifted scrapping is expected to restart that increased pace.
In conclusion positive demand fundamentals, along with reduced fleet availability, causing caused by a more transatlantic and the value phase out of each pelosi fleet should provide support to the drybulk market in the second half of 2020, it's enforced to navigate through the pandemic store.
This concludes my presentation I would now like to turn the call overtime Gilead give for final comments.
Thank you.
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At this time, if he would like to ask your question. Please press Star then the number one on your telephone keypad that star the number one to ask a question. Your first question comes from the liner Randy given with Jefferies.
How are you going audience.
Hello.
Uh huh.
All right so.
Excellent coverage.
Certainly good and current weaken violent but Robert.
That's all going to get stones with upcoming Carter matured.
Good morning.
Plant are booked.
Sure.
12 month quarter.
This operate those in the spot market.
What kind of rates are you seeing for one year charters, capesizes and panamaxes as well as the rebalancing.
Okay.
Yeah.
I mean today that spot.
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You know you said you were not wenker operating the spot market all the time charters.
You're looking at book I'm going to reflect that.
Good strong improvement that's your expected in the back half a year.
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Hi, Rob rates on the 3002 year containers.
No that markets are all framed as well how are you seeing those vessels.
Ordering opportunities.
Month or two.
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Okay. I guess last question for me on your balance sheet.
Pretty good shape, you do have that when others maturity last year.
Looked at our March contracted revenue.
Claims in the distribution coverage I still couldn't from here, so with the expectation for pretty much passion.
From the mouth and that's not too.
This quarter next quarter, how you view the current distribution sure cellphone changes this year and work our unit purchases.
No.
Quarterly.
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Thank you.
Your next question is from a line of Chris Wetherbee with Citi.
Yeah.
A question.
I wanted to ask about.
Europe.
Specific about what we should be expecting.
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Okay. Okay. That's helpful. I appreciate that thank you and then.
How do we think about.
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Yeah, maybe putting what EBITDA does the side.
Worked out leverage over the course.
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Thanks, very much for the time appreciate it.
Thank you.
Thank you I'll now turn it back over to Angeliki Frangou.
Thank you this complete.
Hi, Scott.
Thank you. This concludes today's conference call you may now disconnect.