Q3 2020 Navios Maritime Acquisition Corp Earnings Call

Thank you for dry and that's one of his my time acquisition corporations third quarter Twentytwenty earnings Conference call.

Just a day from the company are chairman and CEO Ms., Angeliki, Frangou, Vice Chairman Mr., Ted Petrone, and Chief Financial Officer, Mr. and no need the scripts.

A reminder, this conference call is me and what.

The watches the webcast. Please visit the Investor section of Navios acquisitions website, adopting without the without the total Navios gosh acquisition Dot com, you'll see the webcast link and the middle of the beach and a copy of the person they shouldn't reference in todays earnings call for school philosophy for out there now.

Now I will review the safe Harbor the state.

The compressco could contain forward looking statements under the meaning of the private Securities Litigation Reform Act of 1995 about Navios acquisition.

Forward looking statements for statements that are not historic of facts such forward looking statements are based upon the current beliefs and expectations of Navios acquisitions management and are subject to east cannot surfaces, which could cause actual results to date for from the forward looking statements.

Such risks of fully disgusting navios acquisitions filings with the Securities and Exchange Commission. The information said for King shouldn't the understood in light of such risks Navios acquisition does not assume any obligation to update the information contained in this conference call.

The agenda for today's conference call is as follows the first Ms. Frangou real for opening remarks, then mr. paternal of keeping the operational update and industry overview next mr., Chris where the your NAV per share positions and outside of the jobs and last day would open the call to take questions now and turned the corner of route and that.

This acquisition is chairman and CEO Mrs., Angeliki Frangou Angeliki Frangou doors and good morning to all of your joining us on today's call I am pleased with those accounts for the third quarter of Twentytwenty during the third quarter. The Navios acquisition reported the revenue of 78.8 million and adjusted EBITDA of 37.1 me now the show.

Acquisition also declared the quarterly distribution of five cents per unit, the presenting and nine other distribution of 20 cents pretty unique the.

The present, a reduction from the previous quarter and.

Like of continuing and set the Beast, we had the them and to pretty sad GAAP.

And that's cool Breeze, and some of the company had a night and day.

I said 54 of US and fleet that includes 47, the first I guess and seven Containerships.

We intend to show and the seven Containership fleet has a current average age of nine here.

For the last word of mouth Navios acquisition generated the revenue.

And the $7 million to $4.3 million and adjusted EBITDA of 200, and then point $2 million [laughter] 29 theme, we reduced our debt by 81.3 me and don't.

In addition, our ratio of net debt to EBITDA. The EBITDA you blog for them.

8.6 times to 5.3 times.

I spoke on the balance sheet. We also continue to the new on the fleet the bareboat charters with it but no GAAP back.

Additionally, we have about for condominium and contracted the revenue and non Dod and thought that the coding is to protect the so many of them aside but also allow us to participate in the market upside.

Slide five hi, <unk> current amended the.

Hi, Jason Im told the market for the NCC vessels and the bump damning oxide.

And not that of vaccines have been announced any frac the day count the the going on of Ryan vaccination shoot for Ben and forms of economic activity, including on cash for days at the time that they reimburse and feel that book is historically low.

Real confused 20, plus years of waived and now we've gone to seven per head of the fleet and in addition, and 11% of the free we'd.

We'd be glad the glass, yes of wage and the next see here for.

And EBITDA that pushes the average age of GAAP and has been blank the 0.7 here since 2008.

We have a non <unk> of the.

The and I live and factory.

New orders for die and get that affected by continued uncertainty over the future environmental regulations relating to for a bunch of system why the NCC ton mile demand is increasing I hope not the export of feel and if I had the capacity expansion in China.

Yeah, and seek so as not visualization good development and good city of Twentytwenty. The company reported an adjusted EBITDA that the $7.1 million and.

55% increase compared to 23.9 million the Golden Goose, the blended 94.

For the nine months and Twentytwenty the company called the denied adjusted EBITDA for the Honda 66 million and 90 Bucks and increased compared to $87.3 million. The goal did and the nine month period Mtwenty 19th and.

Thanks, and I do focus on for bad debt from the market downside why but they should be thing and the market the upside by out and Dr. go index with going to count the bottom.

For the blended 21, we have to the 8.3% of when available based free within it and then addition, and had been bought and 4% free with profit sharing arrangement with the views our debt by 81 point to the man or 7% of of debt outstanding He had the date weighted basis.

If the 5.4 million of my senior notes saving of 5.2 million of you mean the expense items.

And he's out of the bilateral senior note publicly outstanding the seems kind of the $2.6 million.

We should do at 95.8 medium and bank financing.

The two refinancing of the one of my board the.

It's been kind of thing.

Extends and maturing through Twentytwenty for and will be say goodbye and one of the NCC the chemical tankers and seven Containerships. Additionally were expanding affleck with no capex, we have for the interesting your brain and recipes and the bareboat day, three of which have been dropping out of.

And we see the delivery of our first the boating the LDC in October.

Slide seven to build a blended rent due on gross that up.

For next year would have contracted about 51.7% or whatever and a broad base of the novel job that out and eight of 20200 and and said the $7 per day. The is contracted the need and exclude the potential profit sharing from 2200 and they've been day at total GAAP.

Sales for the same bini and is expected to be 18005, founder and $23 per day.

We have 8017 open plant loading and a day would give us and breakeven 16006 scanned and $94. The open day.

Total cost includes operating expense the name that means that the expense interest expense and GAAP then of the payment.

Slide eight shows the liquidity position and I've got balance the fixed the $60.3 million as of September Thirtyth, Twentytwenty and net debt to book capitalization of 72.8% at the.

The point I would like the done the call all the to me the dead for Dawn dead. Thank you Angeliki and good morning. All please turn to slide 10, Navios acquisition of diversified fleet consists of 47 vessels with an average age of nine years totaling 6 million deadweight. The fleet consists of 14, Vlccs 10 of our ones 18, and more true Street, and our one product tankers and two.

The chemical tankers.

The first of the for new VLCC Newbuildings Bareboats deliberate on October 20, Eightth and the charted out very high quality counterparty for 10 year period, and the bareboat rate of $27816 per day.

The remaining three Vlccs bareboat newbuildings the schedule for delivery in Q1, and Q3 of 2021 with the last one due in 2022 and June 2020, Navios Maritime acquisition took delivery of seven Containerships of 18400, you capacity find the liquidation of the service your true the Containerships and north.

Core assets are held for sale.

Please turn to slide 11 for 11 details our chartering strategy.

Which we used to balance the market opportunity and credit risk, we seek protection for market volatility by attending charters of different durations in order to better manage market cyclicality for 2021 about 52% of our fleets available days are fixed and a base rate or at the base rate plus profit sharing and about 4% of fixed on floating rates as a result.

Of the strategy, there, obviously enjoy significant downside protection as well as the ability to participate and any upside with 44% of our fleet day is exposed to market rates.

Please turn to slide 12, Nevis acquisition continues its policy of locking and secure cash flow with credit worthy Counterparties for fleet. The secured about 500 million and long term contracted revenue. We continue to extend the coverage of our fleet, the new fixtures continuations and exercise optional periods, including profit sharing and some case.

Yes.

Please turn to slide 13, slide 13 shows in detail our current charters with their expected expiration dates for our chartering strategy revolves around capturing market opportunity. While also developing dependable cash flow for most diverse group of first class charters. Please.

Please turn to slide 15.

For the entire the globe continuing to be affected by the pandemic the eye and projected global GDP contraction of 4.4 per cent for 2020 led by 5.8% contraction and advanced economies governments put in place unprecedented and bird to see monetary and fiscal plans to support their economies.

In light of this the IMF projects, 5.2% of global GDP growth and 2021 led by 8% expansion and China, India and developing Asia, Yes.

Hey projects the global oil demand decline of 8.8 million barrels per day for 2020, which is a 0.8 million barrels per day improvement over the April forecast. The <unk> forecast for 2021 is an increase of 6.4% for 5.8 million barrels per day.

Please turn to slide 16 as for the graph on the left the decline in oil demand and the first half of 2020 combined with an oversupply resulted in what we see the crude oil inventories increasing and made of 260 million barrels of of the five year average the near term economic outlook is improving as countries have emerged from the quarantine, which a lot of OPEC plus.

The increased production quotas starting in August the assuming demand continues to recover and OPEC plus maintain disciplined and state of cuts the doctor should accelerate going forward for.

Of the graph on the right twin supply and demand oil shocks brought about the price collapse and crude oil as well as contango and future oil futures. The result triggered the rapid floating storage bookings of short and medium duration currently there and 96, vlccs and floating storage, which is about 12% of the fleet.

Please turn to slide 17.

China is the world's largest importer of oil the second largest consumer of oil importing over 70% of its requirements Chinese imports of increased over 300% and January 2009, representing a 12% CAGR Chinese crude imports average 11.1 million barrels per day through September 30% increase over the same period last year.

The second C and the table below and on a per capita basis <unk> oil usage is 5.8 times out of China. European usage is 2.7 times and World usage is 1.3 times and try and it goes to the World per capita consumption levels try and it would require additional of 160 667 vlccs.

Assuming all crude is imported by sea. This represents an expansion of the existing fleet by about 20%.

Turning to slide 18.

The U.S. crude oil production, although down from its record levels of 12.9 million barrels per day and Q4 of 2019 still continues at elevated levels coming in at 10.6 million barrels per day and August.

The level of production combined with reduced demand has and should continue to allow the U.S. the export crude in the future. Additionally, other Atlantic export is led by Brazil planned to increase crude exports more than offsetting declines for the Venezuela, Mexico and Nigeria by two.

2025 at least 25% of Asian crude oil imports will have to come from the Atlantic basin, increasing voyage length of Asian countries depend on imports for between 75% and 97% of crude consumption.

China, India and other Asia will expand the refinery capacity by 3.8 million barrels per day, and 2020 and 2025, representing over 70% of all expansions China in particular has growing supply gap domestic crude production continues to decline and refinery expansions continue trying to its current plan refer.

And every expansion to 18.1 million barrels per day capacity and 2021 translates to an additional 365 million barrels of crude needed, which would require an additional 42 vlccs to the fleet.

Please turn to slide 19.

Net fleet growth the September equaled 3.2 per cent with 8.8 million deadweight deliveries the guests 0.6 million deadweight removals for.

Adjusted net fleet growth for 2020 of 3.7% and only 1.7 per cent for 2021 and.

They've been newbuilding deliveries reduce after year end.

The decline can be petition partially attributed to own is hesitance to or the long lived assets in light of macroeconomic uncertainty and engine technology concerns do the upcoming Seo true restrictions.

Please turn to slide 20, the current order book is 69, the vlccs or 8.2% of the fleet. That's of over 20 years of age or about 7.2 per cent of the fleet, which compares favorably with the previously mentioned historically low order book.

With the IMO 2020, ballast water management regulations that will lead lead to some vessels for retirement after the current disruptions, we believe that the order book and fleet for well balanced please.

Please turn to slide 22, according to the eye a refinery capacity is expected to increase by 7.4 million barrels per day for.

From 2020, the 2025, including all the dishes expansions and upgrades.

Over 70% of that capacity will be added in Asia, and the middle East with the I. projecting China and other non always see the Asia to increase the refinery capacity by 3.8 million barrels per day with the middle East adding of for the 1.6 million barrels per day.

Turning to slide 23, you as crude production increases along with her final expanses and the U.S. Gulf of led to product exports from the U.S. rising by 449% since January of 2000 and for the U.S. has become a net exporter of petroleum products and continues to export significant quantities of products, the Latin America and the far east.

U.S. product exports hit an all time peak of 6.3 million barrels per day in April of 2020 declined to 3.7 million barrels per day as COVID-19 locked down for cold since then and U.S. product exports have average 4.8 million barrels per day underscoring the demand recovery. Since Q2, please turn to slide 20 for gasoline.

The man has increased as COVID-19, Mark Downs have ended and particular Chinese demand has risen above its 2015, the 2019 averages as computers show a preference for driving amid concerns of the social distancing on public transportation for a number of weeks traffic across Chinese cities has been at or above 2019 average levels.

Traffic congestion and near pre coded levels across France, Germany, Switzerland, and parts of Italy.

Please turn to slide 25.

The September the fleet grew at 2.3% on deliveries of 4.5 million deadweight less 0.7 million deadweight of demolition price.

Fleet growth for 2020 is only 2.6% about 6.3% of the product tanker fleet of 20 years of age of older as of October 1st 2020, there are 191 product tankers on order and 459 of which are 17 years of age and older. Total order book is much less than those ships 17 years and older. Thank you. This concludes my day.

And I'd like to turn the call over to lead the need of course for the Q3 financial results. Leo. Thank you did we discussed the financing of these items for the third quarter and the non must be till the end of September 32002, and these didn't the slide 27, the revenue for Q3 2020 increased by 53.6% to seven.

The 8.8 million from 59 million in Q3, 2018, reflecting and 99.1% of utilization and improved and south equivalent of $16807 per day from 15349 Boes per day at seed in the <unk> growth of 2019.

Time charter and and Williams expenses was 2.6 million of operating expenses were 34 million and GE and the expenses were 4.7 million during the quarter. We the pets is 90 million of the Balkans nodes, resulting to a gain of 7 million adjusted for these games and other non cash items and be doubtful to see the planned the 20.

Increased by 55.2% to set the 7.1 million from 23.9 million in Q3 2019 as the results, we reported and adjusted net loss of 3.7 million the.

Moving to the financial results for the nine month period and the September since the 2020 and revenue increased by 48.4 bus and 288.9 million from 194.7 million last year, reflecting the 10 sounds equivalents of $22812 per day and the 99.

The 2% fleet utilization operating expenses were 93.6 million, India and the expenses was the see me.

Adjusted EBITDA for the nine months of 2020 increased by 90.1% 266 million from 87.3 million in 2018, depreciation and amortization of was 49.9 million and then the interest expense and finance growth was 63.9 million adjusted net income for the night.

Mosquito business at the end, but the the 2020 was 43.6 million or $2.73 per share.

Slide 28 provides selected balance the data as of September 32020, GAAP and classic Weve and less including restricted cash was 60.3 million vs. Since net book value was 1.3 billion on assets held for sales relating to the seven point payments acquired for during the day sort of Navios Europe to amounted to eight.

The 2.6 million total losses amounted to 1.5 billion total debt as of September 30, Twentytwenty was 1 billion and haven't indeed going to mean.

Hi abilities and he made into the seven contained in the basin amounted to 77 point for the mean net debt to capitalization ratio as of September 30 improved to 72.8% fourth quarter and Navios acquisition of repairs is another 56.4 million of we'd see mortgage notes, reducing the amount of the publicly outside the notes.

Excellent and then 2.6 million.

Turning to slide 29, we declared a dividend or five cents per share for the third quarter. The dividend will be paid on February 10, 2021 to sort of holders of record as of generic two and 2021 and now I would like to pass the good ones and Mickey for his final remarks and Angeliki.

Thank you Leo the is complete.

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

Our first question comes from the line of Chris Wetherbee of Citi.

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How do you how do you see sort of the potential for that.

For the course of the next couple of quarters.

Do you think that's kind of settles out.

That's going to be the lead over the course of the next couple of months.

Because we've seen.

For the second wave here says how do we think about the unwinding of.

For the next couple of quarters.

I think the the disease that ever and floating storage. If you look of the average age of certainly much older than the active fleet. So I kind of consider them almost of side to the market already I mean, if they come back they probably go to scrap and if you have a a resurgence and the economy you may see them on low.

And and then the contango comes back and they reload again so.

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One last one of the order book.

Particularly on the tanker side, what do you think the.

What do you think it takes for owners to get more confident about.

The new orders into the order book and.

Talking about short term rates I understand those dynamics.

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Okay. That's very helpful. I appreciate the time, thank you very much.

Thank you.

And thank you I'll now return the call to Angeliki Frangou for closing remarks.

Thank you and these companies.

For.

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

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