Q3 2020 Navios Maritime Holdings Inc Earnings Call

Thank you for joining us from obviously holdings third quarter Twentytwenty earnings call fiscal.

Yesterday from the company are chairman and CEO on should make you from <unk> Chief Financial Officer said, George Achniotis line.

Chairman Mr. Trump and senior Vice President.

Teaching planning to stay on these kinds of sales.

As a reminder, this conference call is being webcast twice.

To access the webcast. Please go to the investors section on Navios Maritime Holdings website, adopting adopting out the door vs Dot com.

We'll see the work on sling and the meat long beach on a copy of the presentation reference in todays earnings call from school with also based on that.

I'm with you on the Safe Harbor statement. This conference call could contain forward looking statements within the meaning of the private Securities Litigation Reform Act on 1995 [laughter] This work flow.

Looking statements are statements that are non historical facts such forward looking statements are based upon the current beliefs and expectations of Navios Holdings management and on.

On subject to risks and uncertainties, which could cause actual results to differ from the school when looking statements such risks haven't fully discussed in Navios holdings filings with the Securities and Exchange Commission.

The information said force campaign should be understood in line such risks.

His holdings says not assume any obligation to update the information contained in this conference call on the agenda for today's conference call is as follows well.

Well begin this mornings conference call. We're told my remarks from the management team and after with low quote to take questions. No I turned the corner with an average holdings chairman and CEO Mrs. Angeliki Frangou Angeliki I think it always has been wanting to all of you joining us on todays call given that these things associated with it on day.

I am pleased with day sounds for the third quarter of Twentytwenty during the day Gordon Navios Holdings reported today when you the hundred $26.2 million on.

The EBITDA Oh $60.2 million on an adjusted net income from $2.1 million.

Well it is all day by day demand through the first half of 220, well Scott my deal by sometimes.

Good day moves and now the force boyish amazing.

Nobody is going on these any balance in Q city inconvenient duty bound for Q4, we believe that this improvement is attributable to flow typically the cost at age on a new budget. She bought those the pandemic economy.

Wendy we are optimistic about the expected growth in demand throughout Q4 and 2021. Please.

Please turn to slide four as you can see now there's no James Dix continued to go its board business.

Developing great stemming from the actual prototyping me nervous and getting the company said wants to handle the median EBITDA hooked on D. 19, and more recently in July. They did 20 successfully refinanced senior note dealing 2020 two and then we won't be doing 2022 on.

With a new high.

Hi, Southern Maine on single share good note issuance.

And now with blended trendy Navios logistics commenced approaches from what they say about the gulping Oh, but he is on the boy. This is back to my goal share on the obesity ex Dave but I see.

Any such thing we'd be subject to market and another good day.

Navios badness.

About 465 meal and called out that the revenue.

Now let me ask on Dennis.

I've got the net entity on.

Ask on favorite they've never looked at 53.9% net debt to capitalization I spoke to the city Navios acquisition I think as a company has been if they did so no box markets on demand does anything about 72 million adjusted EBITDA for the second quarter of 220 and has a pipeline of about 400.

80 meal named non contracted revenue.

I think there's a pandemic impact on cash.

Great obviously GDP for the first half of 221 week, given that you all might have down.

However, the economic outlook, we're glad you didn't do on favorable on it.

Hi, Matt expects non my GDP to grow by 5.2% led mainly by the time.

With an ex but did you did know 8.2% next year.

I said he's on it but it is an option to go non with activity. During the first novels blended Randy and I bike day is expected to contract by 2.7% in Twentytwenty. However, as you've gone on must continue doing exactly that I bike trade is projected to increase by 3.9%.

In 2021.

Slide six day <unk> development getting to the city, we achieved a novice I'm not the net.

Hey, Ben day of $20025, but day, five capesize vessels 21090 feet on the floor.

On Panamax vessel and 8000, it's kinda that this $6 wow older Handymax vessel.

We have been renewing and expanding I don't see over the last 12 months. We on the exact is definitely one of US is what I want from 96.7 media assets on your body.

What are they on their botox. Additionally, wish on seven vessels from 88.7 million on it.

Sales for profit.

One of which gross Sean income city flow $65.1 million.

Through this transaction, we successfully increased on lets get back at my age.

Any ideas.

Average day by day said thing but.

As an update on one maturity. This will have engaged in a collaborative discussions with Oh, there's a lot to the sound and a 5 million on 11 reported senior secured notes that are due in August 2022 on.

On there's going to be a majority of their baseband about of note outstanding have agreed to waive the springing maturity. This object an IPO navios logistics to be completed by September 20, Twond do on.

No I'd say, even further detailed hat on any new on an expansion as previously mentioned over the last three months, we added eight vessels to our fleet with an average age of flip on line here why I wish on seven vessels with an average age of that didn't put it from here is it just that fleet average age by 17% from.

10.7 here in Q3 of 2000 99.3 years, you will see us going from additional well lounge <unk> able to expand on let's go back to my eighth listen phone hip on 4 million deadweight gone in Q3 of 2000 19.7 million deadweight goes from Q3 of strength from.

Slide eight highlights on liquidity position items.

At this time, the Plenti and net debt to because then they said it was.

88.9% and would have GAAP and.

On the 19.3 me on doing well.

We have no sense.

Net income weighted Sip in Gulf cutbacks I would like mounted on that going on what we said George on out there.

Navios Holdings CFO John.

Thank you on daily please turn to slide nine for a review of the Navios Holdings financial highlights for Q3, and the nine months to September Thirtyth standard.

Adjusted EBITDA for the quarter was 60.2 million compared to 89.9 million in Q3 of 29.

You'd be done net loss for the third quarter when adjusted to exclude 7.7 million net loans from the sale of two vessels 4.2 million write off of deferred fine on scores Navios South American logistics do you.

To the refinancing mortgage bond and 300000 impairment and get the Navios partners from the sale of one of its best.

EBITDA on net loss for the third quarter of 2019, when adjusted to exclude 69.8 million due to the deconsolidation of Navios containers, including 88.1, mainly on of the N.M.C.I. EBITDA consolidated net financial statements on Navios Holdings.

10.6 million impairment of intangible assets Navios acquisition, and 1.7 million on loss on the sale on the vessel.

The decrease in adjusted EBITDA is mainly attributable to the Lord Tcl day that shipped in the quarter compared to the last year and a 12.4 million gain from the repurchase of our balance in 2019.

What is noteworthy and that reflects the recovery on the market compared to the first over the year when the global economy was affected by the pandemic is up the adjusted EBITDA of Q3 is kind of on the adjusted EBITDA over the first six months from the yes.

Adjusted net income for the quarter was 2.1 million compared to 65.6 million in 2009 day.

The decrease is mainly due to the decrease in adjusted EBITDA and 6.9 million on increasing interest expense.

Turning to the nine month results adjusted EBITDA up would it be on was the 16.1 million compared to 199.2 million in 2019.

In addition to the items that affected because it is on you'd be done net loss when adjusted to exclude 20.2 million impairment loss from the sales of four additional vessels.

And 18.3 million on impairment loss on investment in Navios Europe to both day directly and through Navios acquisition Navios partners.

The decrease in adjusted EBITDA was mainly attributable to that because from the TC rate achieved in the <unk> and their 22 and a half million higher gain from the repurchase of our balance in 2019.

Adjusted net loss for the first nine months of tenant rent deal was 46.7 million compared to <unk> on adjusted net income of 34 and a half from alone in 2019.

The decrease was mainly due to the decrease in EBITDA.

And on 8.9 million on an increase from interest expense.

Moving to slide 10, and our balance sheet highlights as of September 30 has trended Randy the cash balance was about a 119 million compared to about 79 million at the end of December 2019.

In order to ship mortgage notes are about 91 million higher than at year end, mainly reflected the new notes issued a notice on her make on logistics.

Long term debt decreased by 73.7 million, mainly due to the repayment of another southern make on logistics terminal on me.

Over the next slides I will briefly review our affiliates, please turn to slide 11.

Navios holdings owns 18% of Navios partners Navios partners controls that flow 55 vessels 45, dry bulk and then containerships and the member on shown to about 36% of Navios containers.

Since 2008, which leaves about 200 million in dividends from minimum.

Then on slide 12 net.

Navios holdings owns about 29, and a half personal navios acquisition.

And then they has a free though 47 tankers, including 14 vs disease and following the dissolution of Navios Europe to seven Containerships that are held for sale.

Since 2011, we received about 99 million in dividends from it on a.

Moving to slide 13, Navios holdings owns about 4% of Navios containers.

And M.C.I. has a fleet of 28 29 Containerships that company was established in early 2017, two levers that weakness in the containership sector and scaled up its fleet quickly and efficiently.

Since December of 2018, Navios containers shares have been trading on the NASDAQ global select market.

Now I will turn the call over to Dennis Geiger what is for his review of the novice other medical logistics is on its Janice. Thanks.

Thank you George.

Slide 14 provides an overview of Navios logistics Navios logistics operating reported <unk>, we've got Compumat these items.

Bart skied 40, even transportation and product tanker fleet for cost on a GAAP with the state.

Our adjusted EBITDA for the last one from <unk> was 97.3, maybe on.

On three quarters from which was generated from the Port segment.

You know gross.

We commenced the Broughton on it but definitely public offering on they'd be free stock exchange in Guernsey subject to market conditions from another factor.

Last quarter, we agreed to transport 1.5 million don't opine on not better here for the Tony on.

What do you want your beauty on an option to extend from 26 month period.

Bottom line recently notified us that they expected to see 2.7 million total from enhanced through our board in 2021 compared to approximately $1.2 million expected for 2000 price.

As you May know our.

Our contract with violent guarantees a minimum quantity afforded me on comes on line.

However, volume from disengage from laboratory on contract and not very wise. We're here, we're receiving for logistic services on a size moving could easily exports from mean items. So we can keep it will be on either Houston on.

All of these should benefit on important adamant on and the box business on that on.

In September we announced the acquisition of free books, both in 18 bunk barges for setting me on that.

The transaction on includes a contract of affreightment for transporting a minimum of one point 25 million cubic meters of fuel during a period on hop to five years.

We expect to generate approximately 8 million and finally on EBITDA from the transaction.

The acquisition or would it be funded with 50 million on equity to be paid at closing.

And so on this financing well 15 million bearing interest at a fixed rate of 5% but on.

We expect to close the transaction in the fourth quarter of 2020 subject to customary closing procedures.

Please turn to page 15.

In the third quarter of 2020, EBITDA decreased by 15% to 28.3 million from 52.5 million in the same period last year and is adjusted to exclude a non-GAAP net loss on debt expense extinguishment of 4.2 million stemming from the write off of unamortized debt.

Financing costs related to the refinancing of our 2021 and 2022 maturities with the issuance in July or the new senior secured notes due in 2025.

Q3, 2020 Board segment adjusted EBITDA increased by 5% to 21.7 million on the increase was mainly attributed to cry didn't have any would be I don't not dataman on an income recorded from a savvy claim with a cash somebody in the grant items.

In the box segment Q3, 2020 on adjusted EBITDA decreased to 2.1 million from 6.7 million in the same period last year, mainly because of lower revenue from time topic on tax and increased time charter volume and operating expenses.

The performance of the Barb Mark's business. This year has been affected by extraordinary low water levels, either keep it'll be out even system.

In our cabinet business Q3, 2020, adjusted EBITDA decreased by 3% to 4.5 million from 5.2 million on last year, mainly due to fewer operating days and low one time charter rates.

For Q3 2020 met income adjusted for the non cash loss on debt extinguishment was 6.8 million compared to 14.3 million on the same period last year.

This decrease was mainly attributable to lower operating profit and 4.7 million higher interest expenses and finance costs due to the new secured senior notes.

Turning to the financial results for the nine month period, ending September 32020 revenue decreased 3% adjusted EBITDA decreased 8% to 77.5 million on an adjusted net income decreased 1% to 25.9 million from 29.3 million in the same period last year.

Please turn to slide 16.

Now this logistics had a strong balance sheet with no significant maturities until 2025.

Cash and classic we balance at the end of the third quarter were 84 million compared to 45.6 million at the end of 2019 net debt to book capitalization was 54%.

I would now like data the goal over the top line.

Thank you, yes, please turn to slide 17.

On slide 17 presents our diversified dry bulk fleet, consisting of 49 drybulk vessels totaling 5.3 million deadweight 16, Capes 26, Panamaxes fight Supramaxes and two handysize.

We continue to be one of the largest U.S. listed drybulk fleets established over 65 years ago.

The average age of the fleet is eight years, 23% younger than the industry average navios.

Service groups total fleet of 195 vessels include non before Drybulk vessels from.

55 tankers and 46 container vessels Navios is highly diversified public shipping companies.

Please turn to slide 19.

Q3 sort of jump in the BD on <unk> with a quarterly average settling close to double Q2 at 15 22.

Acorda started with nine month high for the BD I enjoy but saw a softening in August seasonality returned is TBD I reach the year to date high on October six 2097 led by Atlantic Iron ore on grain exports being primarily the China before correcting over the last several weeks down to just over 1100 flow.

<unk> point since mid June.

However, the Chinese economy, which accounts for approximately 40% of global dry bulk trade continue to grow on the back of government stimulus, particularly aimed at infrastructure spending.

Moving to according to the IMF will be the only major economy to grow this year at 1.9% with further growth of 8.2% expected in 2021.

The entire globe continuing to be affected by the pandemic. The IMF projected global GDP contraction at 4.4% for 2020 led by a 5.8% contraction in advanced economies GAAP.

Governments have put in place unprecedented emergency monetary and fiscal plans to support their economies in light of this the IMF projects, 5.2% global growth in 2021.

Most recent 2020 forecast for dry bulk trade is a contraction of 2.7% growth.

And the growth of 3.9% in 2021.

Turning to slide 20, the graph on the left shows that for 2021 dry bulk demand for the three major cargoes of iron ore coal and grain is forecast to outpace 2020. This increases led by coal, which is expected to grow by about 4.7% or 55 million tons.

If you look at the graph on the right net fleet growth is forecasted to be 3.4% this year and only 1.3% and 2021.

Net fleet growth is expected to remain low over the next few years as the order book is currently the lowest on record at 6.2 percentage fleet, which is less than 6.4% of fleet that are scrapping candidates.

Turning to slide 21.

Despite this pandemic Chinese iron ore imports are expected to increase by 7.4% and 2022 1.125 billion tons Chinese steel mills have reduced our iron ore stockpiles low by about 30 million tons between June of 2018 in November of this year, China has set a monthly record for iron ore imports.

On July at about 110 million tons with the second highest imports coming in September 106 million tons of steel production continues to set new records.

With the additional availability of eye on Q4 shipments from Brazil, and Australia to China are expected to match Q3 levels at steel mills, replenish stockpiles driving demand for Capesize vessels.

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

Moving to slide 22, the combination of the pandemic and the significant drop in the price of oil and gas has resulted in reduced coltrane.

Asian coal imports, which accounted for over 80% of the world Seaborne trade are expected to decrease in 2020 by about 6.5%, but increased by 4.4% and 2021.

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

Turning to slide 23 worldwide grain trade has been growing by approximately 5% CAGR since 2008, mainly driven by Asian demand.

Overall Asian grain imports are forecast to increase by 9.4% in 2020, and a from a 3.3% and 2021.

An ever increasing world population food security issues, driven by the pandemic as well as increasing protein demand worldwide continues support the global grain trade.

With the pandemic disruptions, causing minimal grain trade disruptions day in international grain Council projects record shipments of wheat, corn soybeans for the crop year. Please.

Please turn to slide 24, the current order book stands at only 6.2% of the fleet, which is the lowest on record new building contracting has collapsed and year to date is down by about 60% compared to 2019 with.

On the order book being front loaded this year and scrapping expected to accelerate as the phase out of the valley. The LLC fleet net fleet growth is expected to remain low at about 3.4% for 2020 and only 1.3% in 2021.

Turning to slide 25.

He has over 20 years of age or about 6.4% of the total fleet, which is that a higher percentage on the previously mentioned record low order book.

Scrapping, which started slowly due to the combination of the pandemic locked down and logistical crew challenges now stands at 13.6 million tons year to date.

It's about a 70% higher than the full year of 2018. It is about 1.5% of the fleet.

In conclusion positive demand fundamentals due to the restart of economic activity around the world along with reduced fleet availability caused by the valley phase out of a jealousy fleet should provide support to the drybulk market and that's continuing effort to navigate through the pandemic store on this.

This concludes my presentation I would now like to turn the call over to Angeliki for final comments.

Vicki.

Thank you.

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Yeah.

Thank you on the floor is now open for questions. If you wish to ask a question at this time simply press Star then the number one on your telephone keypad again that is star one to ask a question.

And I'm showing no questions at this time I would like to turn the floor back over to this angeliki frangou for any additional or closing remarks.

Yeah.

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Okay.

And.

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Thank you.

Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.

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