Q2 2020 Navios Maritime Holdings Inc Earnings Call

We that's today from the company's chairman and CEO Mr. to make you feel good.

Financial Officer, Mr. Trump no these vice chairman Mr. John.

Senior Vice President strategic planning, we stay on the scale.

As a reminder, these conference calls is being well.

To access the White space go to me Investor section on that is my holdings website at <unk>.

[music], you'll see the white goods coming into mean looks at the age and a copy of the presentation fencing today's earnings call 10 scope, but also the property.

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This conference call contain forward looking statements within the meaning so to private Securities Litigation Reform Act of 1995.

[music] forward looking statements has paid.

Okay stock as.

Such forward looking statements are based upon the current beliefs and expectations.

The next month.

In a subject to risks and uncertainties, which could cause actual results may differ from the forward looking statements.

Such risks I'm fully discounts to Navios holdings filings with the Securities and Exchange Commission. The inflammation said <unk> should be understood that night such risks.

This holdings does not assume any obligation to update people nation contain can teach golf.

The agenda for today's conference call. It just phones will begin this morning's conference call with my remarks from the management.

Do we will not come to cool to take questions no. They tend to could over to Navios holdings, Chairman and CEO Angeliki Frangou, Jamie keep they could always have good morning to join us on todays call why the damage that gave you got second season. This year comedies and people are well known when there was another sign but to me it would they.

Great, but but I can adapt to the advertising environment why or why didn't they said he services.

The development community.

They said before there was too I think let me now there's going to the board today, having $97.1 million adjusted EBIT Dollarstwenty $7.2 million and it's not dramatically man.

And then there would be $7 next Monday, he had two days that 20.

They gave <unk> you see baby. They allergies are now that's not a $600 per day rationalize their 2009, BMD outlays only $18000, but they.

They have been coming over the last couple of months Scott.

Yes, some guy.

Got it gave side they have 20000, nobody asked that day.

Which dentist night for as you can see now there's no Jean said by the handed me I mean, there, but that's what 2019.

Let me now there's no gtx substantially we find that senior note viewed when they do it doesn't know be doing 2020 why would they knew 500 meals she's actually grow knowledge is.

Now this acquisition I think his company since then it could get Philadelphia market fundamentals everything about it it doesn't mean adjusted EBITDA for the second quarter of Twentytwenty and had a pipeline of about 400, and making me no they're going after having.

Now there's bothered.

About 500 later in the call doctors revenue and no leverage within that did 0.7, but then in their debt to look up the amazing.

Hey, Scott Davis of all day that everything also have close ever be with leverage would at 53.7, but then they took up the lazy.

Slide five days about them in book.

Right.

Hey, Matt well Jack it so when I put 10 degrees in global GDP growth for Twentytwenty. Most people did either by an 8% decline nothing going on.

That he's out of that he's asking to what's going on that got basically they buy today is expected to come to that by 3.9% indirect lending.

We believe that we have already.

Hi, My Oh, they keep up he has a deep.

Looking forward the concept from definitely government single how started doing.

It's like anything you want to compete for classically D by 5.4, but that's not in China did you diesel gotten to engage but it's going to but then that by go Jason day by day to grow by 4.5%.

Yeah I seek study I thought he said development, we have to actually live we think that investment to be Navios Europe. Due in June two I think like.

Have you seen 7.9 media in gosh, that's Dupont like bye bye.

I think my mounting update we entered into a new 50, we don't see good ill jump and they said was aimed at 5% imagine we see it do for most likely but before they own it's gotten good fluid at all.

And that they'd like to have reacted usually sean to 2005 they.

As I said before being blame on where you don't know.

That's it saves are expected to be completed we deem that headquarters Twentytwenty as a management and they seem to like like 20 now there's no Jason could be fine now its senior note doing 20 to 22, and then we don't be dealing do anything to anyone who they know find another meals senior secured note here.

And then you know we've been going according to he has been much what do I didn't you fight today that knowledge today, I think right Nexus how nice it but then when they use of about 9%.

As you may have not just not minto, Jason Despite a six games announcing that decline was that he would be city exchange when they need to public offering.

Just a market and not as position.

There's no G.

And then why did with respect to that's all city.

Five satellites and liquidity position I don't know tactics, but when he and they said to become days Asia 90 to one two questions and we have got $55.1 billion.

We have not yet maybe didn't go maybe seeping girls got back.

I would like to them that caught it over to it the Georgia No. There's now there's going to CFO Joan Thank you again.

Please turn to slide eight Freddie Gildan Navios Holdings' financial highlights for the second quarter and first six months alternative.

Adjusted EBITDA for the quarter was pretty soon going to me.

To 52.8 billion into a tool. Thank you.

Net loss for the border when adjusted to exclude 9 million impairment losses.

This is in 1.3 million impairment loss can guarantee.

EBITDA and net loss for couture 19, when adjusted to exclude.

18.3 million impairment losses from the single four vessels.

Good how are you going experimental by investment in Navios acquisition.

9.8 million EBITDA contribution from now there's one dinners and 3.1, maybe on net loss from discontinued operations will not responding.

The decrease in adjusted EBITA Daddy's Lexia.

Moving on to dry bulk market doing good too.

The Tc at age we achieved in a border was 25% lower than last year similar corridor.

During the quarter Woody Gordon adjusted net loss of 25 million compared to one adjusted net loss for 1.6 million in 29.

That is mainly due to that because maybe Doug.

Moving to the first got financial highlights.

Adjusted EBITDA for the first couple of 20 trendy was 55.9 billion.

Right, but let me only repairs gobbled 90.

In addition to the items that affected the Q2 EBITDA. The first half results were adjusted to exclude living friend to me.

[laughter] relating to Israel of two vessels in Q1, and 18.3 million impairment relating to matters, we look to what they do clean Florida peaks.

See me not to the quarterly results. The Dickerson adjusted EBITDA was mainly due to their debt then we're going to drive to market.

Adjusted net loss for the first couple of tenant when he was 48.8 million.

Okay, and that's almost a 1.1 million in 29.

[music] moving to slide nine in our balance sheet highlights.

That's all doing they're getting plenty candy.

Cash balance was about 55 million compared to about 75 million or not they don't December 2019.

Senior and ship mortgage notes and about 80 million lower than the other mainly reflecting the knowledge bought back in Q1.

Over the next few slides were pretty fair to grow our subsidiaries.

Turn to slide 10.

Navios Holdings owns states have personal Navios partners Navios partners sequential jump to the 53 vessels for disease type I can think containerships.

Mmm on so it's about 34% of management team.

Based on the company's kind of distribution, we expect to do you see of about 400000 annual dividend.

Since 1008, where they see is about 200 million in dividends from Navios partners.

Turning to slide 11.

Navios holdings owns about 31% of Navios acquisition.

Hey, guys. If you know 47, deckchairs, including 14 abuses and following the initial regional Navios Europe to several containerships to held for sale.

The companies are going to the government attack your market because you recorded significant group revenue compared to Q1 of my Dear.

Based on the company's kind of distribution, we expect to receive about 5.8 million and I know dividends.

Since 2011, we see is about 97 million dividends from anything.

Moving to slide 12, Navios holdings owns about 4% of not just one data.

Then M.C. I guess, if you'd have to 99 Containerships. The company was established in 2017.

Operator that weakness in the containership sector and scale topics extremely quickly and efficiently since December of 2018.

Now this one Dan as you it ends up in general the must go much select markets.

And this concludes my presentation at this point that we turn the call over to get scheduled is well keep you'll get another southern Maine color just exercise Jonas Thank you George.

Slide 15 provides an overview of Navios logistics Navios logistics for better report that counts, we sort of complemented by a box skewed to 14, if that's what they want and brother Bakken fleet for cost in carpet that's great.

Our <unk> did not for the last 12 months, we're confident in 1.5 million above 70% of weeds was generated from the board segment.

Last quarter, we announced the type of contract to the Dorian God you what are the tuxedo rental vital north to one bought back when I mean, what I hope I knew.

We had at least one announcement, we have now signed one here going dark within <unk> expense, what it seemed like six month period.

Well 1.5 million pounds per year.

We continue to focus on growing our board. These men leveraging our installed capacity and developing new infrastructure. We also recently filed with the Brazee message is coming from what it but that's kind of Bobby cooperate on the BP still gets and subject to market conditions and other pockets.

Please turn to page 14.

The second quarter of 2020, <unk> decreased by 2% to 27 million new up from 27.5 me doing the same period last year.

Good to dispose of Gresik Board segment EBITDA increased by 8% to 18.9 in New York. The increase was attributed to high throughput in claims that have been really moved away.

Either been segment could do the carbon black every that'd be great to see me up from 5.6 moves on the same period last year.

Mainly because of lower everything from liquid got it wasn't in time charters.

You know account with US business grew to 2020 EBITDA increased by 40% to 5.1 million from 4.4 million last year, mainly to use more operating days.

What could go to southern 20, net income will stay from New York compared to 9.7, New York you Miss a beat up last year.

The increase was mainly attributable to higher interest income and Gordon from the novel, albeit slow not getting.

That into the financial results for the six month period, ending June 32020 revenue decreased 1% EBITDA decreased 5% to say 49.2 medium and it becomes increased 27% to 19 million from 15 million of the same beat up last year.

Please turn to slide 15.

Not really logistics kind of strong balance sheet with no significant maturities until 2025.

In July weeks, with 500 million pinpoint, 75% senior secured notes to refinance the 375 million senior notes due in 2000 thing to do and they're 97.5 million outstanding balance on that then we don't be due in 2021.

Then you know our view of 2025, we cannot simply the month, Bob Glasspiegel drink water from the coupon beginning in 2022.

The biopsy data as of June impacted frozen Brandy does not reflect this if I'm asking other transaction closed in July I would now like to during the quarter over to Ted Petrone. Thank you. Please turn to slide 16, Slide 16 presents a diversified drybulk fleet, consisting of 52 drybulk vessels totaling 5.7 million.

Wait.

17, Capes 28, Panamaxes five supermaxes into Handysize.

We continued to be what a largest U.S. lets the dry bulk fleet established over 65 years ago. The average age of the fleet, a 7.7 years, 25% younger than the industry average nurses group total fleet of 196 vessels.

95, dry bulk vessels 55 tankers and 46 container vessels Navios is a highly diversified public shipping group.

Turning to slide 18.

In the last few months, we have seen extraordinary volatility in rates as the first half cargo demand slumped on the back of impact.

The restrictions caused by the pandemic, however, the Chinese economy, which accounts for approximately 40% of global dry bulk trade returned to positive growth in Q2 on the back of government stimulus, particularly aimed at infrastructure spending.

The BTI reflected this unusual seasonality.

Reaching a year to date low of 393 had mid may before turning around to reach a nine month high of 956 in early July on the back of a strong recovery in demand led by Brazilian iron ore exports, which helped Cape rates reached close to 34000.

Before correcting over the last few weeks to just below 20000 as of yesterday.

Within the entire global continuing to be affected by the pandemic the IMF projected global GDP contraction of 4.9% for 2020.

Led by an 8% contraction in advanced economies.

I'm going to put in place unprecedented emergency monetary and fiscal plans to support their economies and delighted this the IMF projects, 5.4% global GDP growth in 2021.

Led by a 7.4% growth in emerging and developing Asia.

As a result will be above seaborne drybulk trade is projected to contract by 3.9% in 2020 and grow by 4.5% in 2021.

Turning to slide 19.

The graph on the left shows for the second half of the year Drybulk demand for the three major cargoes of iron ore coal and grain is forecast to outpace the first half by about 6%.

It's increases led my line, which is expected to grow by about 8.2% or 60 million metric tons, which will come from Brazil, adding to ton miles.

You look at the graph on the right net fleet growth is forecasted to be 3.1% this year.

Second half delivery is expected to be 44% lower than the first half, resulting in only 0.8% expected net fleet growth in the second half of this year.

Turning to slide 20.

Chinese iron ore imports were flat last year, but expected to increase by 5.7% in 2020.

Chinese steel mills have reduced the iron ore stockpiles of about 45 million metric tons between June of 2018 in July of this year.

With additional visibility line or in the second half of Twentytwenty shipments from Brazil to China are expected to increase by about 30 million tons per quarter as steel mills replenished stockpiles driving demand for capesize vessels.

The Chinese fiscal stimulus and infrastructure spending should support steel production and in turn Drybulk trade going forward.

Moving to slide 21.

The combination of the pandemic and the significant drop in the price of oil and gas has resulted in reduced coal trade Asian coal imports, which account for 80% or the world seaborne trade are expected to create decrease in 2020 by about 6.2%, but increased by 5.3% 2021.

Reduction has added pressure on the smaller sized vessels, which has been partially offset by increased demand for grains discussed in the following slide.

Turning to slide 22.

Well I'd grain trade has been growing approximately 5% CAGR since 2008, mainly driven by Asian demand.

While Brazil drove first half grain trade with a record soybean shipments in April and May the U.S. as expected.

The dry the second half of this year's grain trade based on record corn news soybean production forecast for the coming crop year.

China has been and is expected to be a major buyer of soybeans and corn. This year I just seeks to rebuild it swine herd and avoid food sort shortages.

And increasing world population as well as increasing protein demand worldwide continues to support the global grain trade with dependent make disruptions, causing minimal grain trade disruptions the international grain council projects record shipments of wheat, corn and soybean for this 2020 crop year.

Please turn to slide 23, the current order book stands at only 7% of the fleet, which is the lowest on record.

I think contracting has collapsed and year to date is down by about 66% compared to 2019. This decline can be partially attributed to Otis hesitance to order long lived assets in light of macroeconomic uncertainty and engine technology concerns due to upcoming Seo to restrictions.

With the order book being front loaded this year and scrapping expected to accelerate in the second half due to the phase out of the valley deal. The L. O C. Net fleet growth is expected to remain low at about 3.1% for 2020.

Turning to slide 24.

Vessels over 20 years of age or about 7% of the total fleet, which is the same percentage as a previously mentioned low order book scrapping, which started slowly due to a combination of pandemic locked down and logistical crew change challenges now stands a 10 million.

Dead weight tons year to date this amount exceeds a total for the whole 2019 by about 23% and is an excess of 1% of the fleet.

In conclusion positive demand fundamentals, mainly due to easing of lockdowns around the world and the restart of academic activity along with the reduce fleet availability call caused by the valley phase out of it the yellow see fleet should provide support to the drybulk market, it's continuing effort to navigate through this pandemic storm.

This concludes my presentation I'd now like to turn the call over the edge Lucky for her final comments angeliki.

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 again that is starting to number one to ask a question.

At this time there are no questions in queue I'd like to turn it back over to Angeliki for closing remarks.

Thank you.

Okay.

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Yes.

Good.

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Thank you.

Thank you. This concludes today's conference call you may now disconnect.