Q4 2020 Navios Maritime Partners LP Earnings Call
Thank you for joining us on Navios Maritime partners, Good day and free.
Yeah, 2020 earnings conference call and lead US today from the company are chairman and CEO, Ms. Angeliki <unk>, Chief Financial Officer, Mr. Staphos of C. P and executive Vice President of business development, Mr. George I have no interest.
As a reminder of this conference call and webcast to access the webcast. Please go to and the investors section of Navios partners website at Www, Navios dash and must be dot com sales.
And you'll see the webcast link and the middle of the page and a copy of the presentation referenced in todays earnings conference call, but also of the shop there.
Now I will review the Safe Harbor statement This conference call and could contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Navios partners.
Forward looking statements are statements that are not historical facts such forward looking statements of based upon the current beliefs and expectations of Navios partners management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward looking statements and.
Such risks and fully discussed and now there's patent filings with the Securities and Exchange Commission sales.
Information set forth herein should be understood in light of such risks.
And just pardon and does not assume any obligation to update the information contained in this conference call.
The agenda for todays call is as follows first and finally will offer opening remarks next instead of the sheepish will keeping all of the view of Navios partners financial results the.
Then Mr. None of these will provide an operational update and then the industry overview and law.
So you will notice the close to take questions now I turn the call over to Navios partners, Chairman and CEO. This is angelica and fun.
And Janine. Thank you Dick and good morning to all of your and joining us on today's call and I am pleased with our results for the full year and the fourth quarter of 'twenty 'twenty four the food and hit of 22, and eat and Navios partners reported revenue of 226 and $8 million and adjusted EBITDA of 99.8.
For the fourth quarter Navios partners reported revenue of $59 $2 million and adjusted EBITDA of $35 5 million on Donuts.
I imagine it was navios maritime containers, and what was approved and is expected to close on March 31st 2021, and these will be and transformative transactions will not reach partners.
And we gave you the music and benefits of business. If he gave you.
And you can see on slide four the four.
The muscle of their marriages and the men when you have 85.
Approximately half of the Miss I mean would it be dry bulk vessels and the others will be container ships when measured by the number of balance.
And the benefits of diversification and its landscape and recent market activity. The container segment began strengthening and the first quarter of 2021 and the dry bulk market has become and.
And 2021.
The transaction base day.
The diversified asset base with any increase and and capacity there and not and D. D. We benefit from a simplified capital and then it will kind of immunization and strength, thereby reducing costs and the entity, we have and enhanced credit profile. So the increase cash flow.
Supporting the networking as well as growth. Moreover, the like the asset base, we provide the entity is that the music and Bath and hopefully knock on his line.
The finance and potency of these combinations can be measured some of the pro forma combined and the values of 2020.
And the emerging been effective for 2020 the praful.
For months and anything you would have been pretty Hampden and 54 million on doing it.
And this metric some lump understates the opportunity is there and deadline and ate market for year to day to day, and 'twenty or 'twenty, one is materially higher than it was on the average for Duane Duane D and.
And then the men or Andy has more on that contracting for two and 21. Please turn to slide five pro forma for the merger of company, we'd be one of the 10 largest public condition today and goggle fleet.
Yeah, and premiere and goggle shape and platform.
900, and me of contract the demanding for 2021 on drafting the revenue is expected to generate growth and six mainly of in excess of startup of seat expansion on.
On the combined basis of about one third of one of them.
The number of days on open or index, and providing market exposure to capture of market the appetite.
Lastly, we have and strong balance sheet with low leverage and combined net debt to book capitalization is 48, 5% about 90% of our debt is gathered by the scrap volume of my wish and so they've been net.
Michigan, but on a lot of the gummy vitamins.
And I had six close to the recent develop their.
Yeah.
Merger with Navios containers and is expected to close on March 31st.
Post merger and then men will have approximately $19 7 million units outstanding for the fourth quarter, we generated $35 5 million and adjusted the Mcdonough dreadful and made meaningful is the adjusted net income and <unk>.
And 1.1 dollars he said that the earnings per unit.
We continue to the newest fleet and then grow on age we'll fine we and can eat to acquire six dry bulk vessels with an average age of about two years and shrunk the fall of assays with an average of about 13 year.
And I still have balance sheet. The date, we are in advanced discussions to finalize and it sounds like it's been mainly on loans to refinance and upcoming maturity and the third quarter of 'twenty Duane you on.
The new law, we have an interest of a 3% and above the eyeballs and amortization profile of about five years and maturity and the second quarter of 2025, we can finalize and additional 58 million loan, which will be used to finance the acquisition of two vastly.
And the financing and existing facility. The terms of the loans included in the estimate of three briskly and above the ibook nowadays the seasonal profile of about nine years and maturity and the first quarter of 2020 six.
Slide seven and search for key strength of the combined entity and the Memphis, and then has the ability to generate free cash flow and 2021 contracted revenue exceeds the total sleep experiences of my drove $6 million with more than one third of my saleable. They open and made the ex <unk>.
And there's an ample opportunity to provide further the free cash flow and the men and history.
From the balance sheet with low leverage and 43, 5% and combined net debt to book of standardization and the men and diversification.
Asian and stay within 85 vessel fleet, we and.
And in the adult and among the publicly listed the goggle fleet about 66 per cent of wear now available day athletes and the Novelis chapter the aid of 18000 and since coming in two out of doing the net but day and 74 per cent of athletes available based on open.
On the index linked debt.
The definition of engagement and now.
Violence, and chartering strategy of course different business segments optimizing of the blow that potency and with cash no share that day.
And the men is well positioned to benefit from the different sector fundamentals and we have $89 four per share and Omaha mailable contain that day.
To capitalize on the market strength with 53.5 per cent of land available dry bulk vessel day exposed to market the age for 2020 one.
On slide eight we laid out one of the GTP bills since 1970 and.
Just kind of safe on the adult golf on the on the stage that I am missing expects global GDP to grow by five 5% in 2020 on these would be the highest GDP growth of eight and the past 50 years importantly, the percentage of Greece, perhaps on the stage.
The impact and the nominal the debate today is exponentially and tie them compared to the nominal GDP of.
50 years ago.
For example, global GDP and 2019, equalize 88 premiums dollars almost 30 times the global the degree of three 3 million and 1970 of course.
And do they see and magnitude of today's global GDP may of two both jobs the economic impact, Okay particular percentage point of growth when compared to the 1970.
Slide 90 day, so operating cash flow potential for 2021, 66% of our payable base I think I've done my average range of 18006 continents and.
The $8 net per day.
The remaining 74 per cent of what available day that that open all on index linked charters provide us with more upside of contracted the raising of alone exceeds our total fleet expenses by $26 million using the guidance and market average time charter rate.
On the 23000 highest standard and the $49 per day, we believe and of men is well position plenty of strong 2020 one.
Slide 10 shows the combined liquidity as of December 31st 2020, We had total gosh 58 point to the million dollar and total borrowings of 719 million and donuts and the.
The debt to book of term aviation is 43, five per cent and debt maturities and I get through 'twenty and Sandy.
At this point I would like the doesn't have gone over to Mr. Stratos <unk> Navios partners, and CFO, who will take us through the results of the fourth quarter and full year of 2020 fingers and the Jim Good morning.
I'll briefly review, our unaudited financial and advanced for the fourth quarter and year ended December ahead of Christmas on frequently.
The financial information is included in the press release and is summarized in the the slide presentation on the company website.
Before I start discussing our financial highlights I would like to draw your attention to sit on and off of one off items with a list of the slide 11.
For simplicity, the discussion of the financial it sounds of below exclude the effect of the one of items listed in the B C.
Right.
He's leaving the business.
Adjustments as of 46 million and betterment in order and risk and the numbers of containers, bringing its book values to approximately 25 million.
Middle of responding this accounting and Pimpin economically on and Brisbane has significantly increased in volume.
And so on Yesterdays closing price of numbers of containers units out of investment amongst global the covenant and media.
I think the like you mentioned earlier today the numbers of containers unitholders approved the merger of another spotless.
The message is expected to close on March 5th the first one to go into on.
The food the results of operation of the Navios containers will be included members publish women's commencing April 2021.
Moving to the financial results of Luna shown on slide 11.
And for revenue increased by $7 9 million to $69 2 million compared to 61, two and 3 million for two purposes of 19.
The increase was mainly due to the 59, 3% increase and available day, the ease and coupons printed windy day.
And could you just was mitigated by you submitted were reported.
The decrease in the time charter equivalent rate achieved in the fourth quarter sort of turned the granting.
Adjusted EBITDA for the fourth quarter of 2000, Randy and increased to 75 and the half a million and.
Particularly the <unk> 7 million for the coupon of 2019, mainly due to the increasing the revenue will discuss the month.
Adjusted net income for the quarter.
I'm on the grid wellpoint and 8 million Felipe.
Fleet utilization for the fourth quarter of 'twenty 'twenty was released 100 per cent.
Moving to the drill months of operation.
Total revenue for the year increase of $226 8 million compared to 219 point and 4.002 million 19.
The increase was mainly due to the 52 point and 3% increase and available days and to integrate it.
The increase was mitigated by Greenpoint, and 9% decrease and the time charter equivalent and events, even in 2020.
Adjusted EBITDA for the potential grantee amounted to approximately 100 million compared per hundred and 20 million in 2019.
The decrease is primarily due to and Grinned department and the happy lunar and <unk> inhibition of operating expenses, mainly due to the increase of sleep and $3 million increase and general and administrative expenses, mainly due to the increase blip and the 1.4 million decrease in equity and net earnings of affiliate companies.
The Bobby and Chris where a bunch of them there, but because these were partially mitigated by the $7 4 million indicators of the revenues discussed on Bob The one point and 3 million degrees and time charter and voyage expenses and the one point of 1 million an increase of net of income.
Adjusted net income for 2020 amounted to 1.8 million.
Turning to slide drill I will briefly discuss some key balance sheet data on hold at the same.
And but 50 fishman to 'twenty.
Cash and cash equivalents were still the point 7 million.
Long term borrowings, including the current portion mid of deferred fees amounted to $486 9 million.
And of course, it has been significantly reduced as the result of the repairing and answered with the term loan b as well as the decrease in LIBOR rates.
And this resulted in the reduction of interest expense for 2020 by the approximately 15 million compared with 2019.
Net debt to book of utilization, where 40% of of the end of the year.
Slide 15 shows the details of why the combined fleet, giving effect to the merger with leverage of containers.
Our fleet isn't the Doctor and publicly listed dry cargo fleet globally on as measured by number of emissions.
We have a lot of modern and diverse fleet of 85 vessels with the total capacity of 7.8 million deadweight tons.
And our fleet consists of 49 billion of on missiles and 56 container ships.
In Slide 14, you can see the latest update of our fleet, we actively the new and expanded fleet, we agreed to acquire and six drybulk vessels with an average age of approximately two years.
We agreed to acquire the creeps up on this new building capesize vessels contracted on the on the 15 here a bit about the inflection.
And actually the provides for an effective purchase price of 51, and a couple of million and and effective interest rate fixed one of the 15 year period of $4 four per cent.
Maybe just because of the escalating purchase options on the divisions, starting with the airport and put a good chunk of the duration.
All the vessels are expected to be delivered and the second half of 2022.
We agreed to go Brookwood and people haven't we'll be the Crimson and the commissions for export of approximately $59 3 million.
Also we agreed to acquire and you're building capsule of much of Israel for 51 6 million. The vision is expected to be delivered in the second half of 'twenty to 'twenty two.
We also agreed to sell four vessels, having and loving the age of the didn't yes for the total sales price of 52 point of $8 million.
And slide 15, you can see on Saturday and its non digital coupons on 'twenty one.
We are focusing on taking advantage of the different fundamentals of course across the six of the reopening to maximize profitability.
We have currently fixed 66% of our 29026 of available days from 'twenty to 'twenty one.
We have capitalized on the strength of the containership market and fixed almost 90% of on available containers of days for 2021 and joined Hilton H.
Additionally, we are positioning on the dry bulk fleet for what we hope will be a strong balance of 2021 and we have market exposure on 53, and a half of a lot of days moving again.
On Slide 16, you can Seattle, our ESG initiatives, we're talking about ESG I think it's important to remind people. The transoceanic shipping is the most environmentally friendly mutual transportation as it is the most kind of on efficient model of possible.
However, we do not take that for granted.
And we aspire to have zero emissions by 2015 interest.
And this process, who have been pioneering and and adapting symptom of environmental regulations after two years and the trends.
And I'm also part of it will be working with the socially conscious group.
Whose core values of glu diversity inclusion and saved.
Finally, we have very strong corporate of the governments had called the meetings.
We have majority independent data and independent committees, and I'm not going to share the management and operations.
I know part of the quota, Georgia and reduced executive Vice President of business development interest.
Sales of interest protection. Thank you status. Please turn to slide 18, with the help of and a strong second half 2020 ended the year with the PDI, averaging 1066 today the beat the ice stands at 2271 with the year to day average more than double its level at the start of 2020 and the highest.
And it has been and 11 years.
Governments, having put in place the emergency monetary and fiscal plans to support of the economies have kick started the posture of unexpected of the recovery and the world economy.
This has led the IMF to increase as 2021 GDP growth projection of two five and a half per cent, the highest and 50 years and four 2% and try and true.
And that demand and restocking is expected to boost demand growth well above net fleet growth supporting the additions of magic of rising rates and.
And just the last month sub Cape time charter age of his 10 year highs and what is normally a seasonal low period.
These increases reflect searching trades driven by a strong demand for both major and minor bulk commodities 2021 dry bulk trade is projected to increase by three 7% and further increased by 2.2% and 22.
Turn to slide 19, the mine is forecast to outpace net fleet growth and post 2021 and 'twenty two of the.
On the graph on the left shows that for 'twenty, one the Rab.
The demand for the three major of cargoes of iron ore coal and grain is forecast to increase by over three per cent compared to 2020.
If you look on the graph on the right net fleet growth is forecast will be two six percentage this year and the only 0.7 per cent for 22.
And net fleet growth is expected to remain low over the next few years and as the order book is the lowest on airports.
Turning to slide 20 the.
And by the pandemic, China, China sales another yearly record for iron ore imports in 2020 at about 1.15 billion tons, which is on increase of nine 4% over 19.
Chinese steel production and surpassed the 1 billion tons of Mark in 2020.
Global Iron ore demand is expected to increase by two 7% this year and additional availability of iron ore shipments to China are expected to increase and still meet the replenish stockpiles and driving demand for capesize vessels.
Forecasts are also for growth in iron ore imports around the world as the effects of the pandemic recede.
Europe's imports are expected to grow by 15 per se in 'twenty, one and Asia, Excluding China is expected to import 9% more iron ore and 21000 and plan to trend.
Please turn to slide 21 in.
Asia and call the imports, which account for over 80% of of the world seaborne trade and expected to increase by four 3% and 2021 following the decline of six 8% in 2020.
The 2020 decrease is mainly attributable to Indian and Chinese imports declining by 13, and 8% of respectively and we had.
And arm and other southeast Asia countries increased coal imports by 13%.
Turning to slide 22 worldwide grain trade has been growing by over 5% CAGR since the lows and eight mainly driven by age on demand, which increased by 15% and 'twenty 'twenty and is expected to increase and further two 9% and 21.
Overall, the grain trades increased by 7.7% and 20 and is expected to increase by about two percentage of 21.
And an ever increasing world population food security issues, driven by the pandemic as well as increasing protein demand. The worldwide continues to support the global grain trade.
While grain production of these here will reach on echoed according to the international gains counting and the USDA.
Please turn to slide 23 the.
And the current order book stands out there and of course lower of $5 seven per cent of the fleet, you'll build and contracting was down 56 per cent tenant and 'twenty compared to 19.
Through mid March 2021 contracted is down by about 62 per cent compared to the same period last year.
Accordingly, 2021 net fleet growth is expected of two six per cent and only <unk> seven per cent for 'twenty two.
Turning to slide 25 net.
Total of about 20 years of age of about seven 6% of the total fleet, which compares favorably with the previously mentioned record low order book.
Scrapping totaled 16 million tons in 2020 almost doubles the 2019 total.
Year to day scrapping has total of three 4 million tons, which is on pace for much of 2000 and sandy.
Please turn to slide 26, focusing on on the container industry.
As previously mentioned the stimulus measures have caused the recovery of consumption in the advanced economies of the same time that it is increasing the industrial production and economic growth in China.
The stack of the stimulus has led to historic turnaround and global container trade.
On the rates rose dramatically from mid year 2020, led by the China to the U S West Coast, and China to Europe, and trade trades as depicted on the chart on the lower right.
Containership demand growth of $5 seven per cent and 2021 and three 7% in 'twenty two is expected to exceed supply as pent up demand port congestion and the destocking and emphasis and consumer demand for goods all support the increased and Christian content and standardized volumes.
Please turn to slide 27.
The recent minute rapid market and cafe has closed the extremely high demand for available tonnage, which is in short supply of cortisol segments and.
Particularly the extremely tight availability of Panamaxes combined with poor congestion increase and trade and lack of new buildings has properly period of time charter and needs to hit the 10 year highs of $37000 per day for periods of up to a year.
And CFA Bulks and aides have climbed 222 per cent from April 2022 matched anyone spread by the earlier the start of the Chinese equality and from continuing demand for consumables and pandemic related suppliers worldwide.
In conclusion positive demand fundamentals, mainly due to the restart of economic activity around the world along with reduced fleet availability should continue to support both the dry bulk and containerized shipping industries and their continuing effort to navigate through the easing pandemic storm.
And this concludes my presentation I would now like to turn the call over to and Gilead for your final comments and Gil again.
Yeah.
Two questions.
Thank you and the floor is now open for questions and if you wish to ask the question at this time simply press Star then the number one on your telephone keypad again the star one.
A question from the line of Randy given the <unk> of Jefferies.
How the Angelica and team how youre doing.
Good morning.
One of excellent alright, a couple of questions I guess first for the vessel sales and purchases and it seems like you're obviously, adding some drybulk exposure, while shedding some containership. The exposure is there say a view on those respective markets or is this purely a fleet renewal play and then going forward, which subset.
Or would you maybe look to growth.
Sure.
All of the.
And small net.
Uh huh.
Yes.
Yeah.
And.
Yeah.
I mean.
Yes.
The important.
From that point of view.
On the market.
It's a day.
You may have some more.
Opportunities to pick up.
Right.
And have somebody.
And let's not forget that the containers.
The sector has been.
And the container sector.
And so on.
Second half of last year.
Right.
Sure.
That's the way I see it.
Yes.
And different.
And so.
Got it sure that makes sense.
And then and now that obviously, the the Drybulk and containership markets are both extremely strong your balance sheets and great shape, the mergers of weak OE now right. So congrats on that.
What will it take to increase the distribution and how will you balance that with maybe unit repurchases as you're still trading at a pretty massive discount to any of them.
Okay.
Yeah.
And then.
Some of that.
Part of it.
Meaning.
Great.
Net.
Oh sure.
Cash flow.
I think of that.
And on.
The profit.
Got it.
And I want to remind that.
The bulk of our mine.
And placed on them.
Yeah.
Yes.
And our strong cash.
And.
And in fact.
Sure Okay.
And then lastly, just quickly can you provide any quarter to date range for the first quarter now of that where you know a week away from that being concluded for the drybulk vessels.
Hey, good morning, Joe.
Good morning.
We have put out some day.
So you will see that we had almost of 100% of fixed on both sites.
But on sort of the.
And the site.
On average and we add up.
Approximately.
It's a little bit of $15000.
After the eyesight.
And that I was just a matter of $17000 on the container ships, and just where the mitraclip and for your modeling zone.
And remind you that and others.
And as the only resolve.
It will be included and nobody is negligible.
On me, but in the past.
As I mentioned is expected to close on March 31st.
And the team.
Results in the EBIT.
And going forward.
Okay.
That's it thanks for that color and congrats again.
Thank you.
At this time I'm showing no further questions I'd like to turn the floor back over to Andrew Linky Fanger for any closing remarks.
Thank you on this complaint.
Yeah.
Thank you.
Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.
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And.
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