Q1 2021 Navios Maritime Partners LP Earnings Call
With us today from the company are chairman and CEO and is Angelica for our group Chief Financial Officer, Mr status, the zippers and executive Vice President of business development, Mr. George I'm not.
As a reminder, this conference call is being webcast to access the webcast. Please go to the investors section of Navios partners website at Www Dot Navios cash MLP dot com, you'll see the webcast link and the middle of the page and a copy of the presentation referenced in todays earnings conference call will also be found there.
Now I will review the Safe Harbor statement. This conference call could contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 about Navios partners.
Forward looking statements and statements that are not historical facts such forward looking statements are based upon the current beliefs and expectations of Navios partners management and.
And are subject to risks and uncertainties, which could cause actual results to differ materially from the forward looking statements.
Such risks and more fully discussed in Navios partners filings with the Securities and Exchange Commission. This information set forth herein should be understood in light of such risks Navios partners does not assume any obligation to update the information contained in this conference call.
Agenda for todays call is as follows.
First and it's valuable for opening remarks next Mississippis would give an overview of Navios partners financial results then Mr. Notice will provide an operational update and an industry overview and lastly, we'll open the call to take questions now I turn the call over to Navios partners, Chairman and CEO Mrs.
And you look at brands and the leaky, thank and Doris and good morning total he will join US on today's call and I am pleased with a solid for the first quarter of 'twenty 'twenty. One during Q1 total revenue and other spotless and others containers was 100 and and eight $8 million and total adjusted EBITDA was $56.
$4 million.
Post merger as you can see it feels like for approximately 57 per cent of our fleet is comprised of dry bulk vessels.
And then other at 43 per cent of container ships.
Related by a number of lessons we exit we expect these two segments the share of us well.
Total normal industry cyclicality.
Slide five we show the royalty the big growth since 1970, as you're going to see global GDP growth is projected to be 6%. In 2021. This will be the highest growth rate and the past 50 years. The percentage increase also on that day they expected.
Nominal global GDP in 2019 was about 88 trillion. This is almost <unk> larger than global GDP.
Great.
And 19 seventies.
Stated another way the expected 'twenty, two and do them pretty big growth is almost two times day in diodes at DB.
Over the wall and 19 seventies. Consequently, we are optimistic about demand for dry bulk and try and goggles vessels throughout 2021, slide 60 bankrupt and yet drive goggle shipping platform Navios partners guys had top 10 publicly listed dry cargo fleet was 89.
Dresses comprise of 51 dry bulk vessels and 38 container ships, we expect that debt diversified fleet with insulate us from some industry, they've gotta be as dry bulk and thrive goggle.
Current demand driver given that one segment is based on transportation of raw materials.
Both of Minerva and agricultural commodities and the other segment is focused on transportation awfully good.
Can already see the impact of these different drivers and and available debt given the strength and the container industry and.
In part driven by pandemic economy needs.
And just about 89% a lot of available days and contract while the dry bulk and began to strengthen in 2020. One and is continuing we have over <unk> 62 per cent of our dry bulk available days open or on index linked charters.
We expect that these two segments housed in a simple company make for a stronger entity.
The free scale strength of other operating platform is visible net operating breakeven.
And contracted revenue for the remaining nine months of 2021 exceeds total estimated fleet expenses by $21.2 million, we are still well positioned to capture the increasing charter rate and.
About 40% and all of them.
And our payable days and either open or index linked non.
Lastly, we solved and strong balance sheet with low leverage net debt to capitalization is $58 three per se I know that the asbestos and violence English and response to their day to market their book values and less than the guidance as I said as long as this.
And is in sharp contrast to the bus non barrels here, where vessel book violence larger zone.
Market values often significantly.
Slide seven and go through and then Mems and development.
During Q1, we generated 800, and and eight $8 million and told them revenue $56 $4 million and total adjusted EBITDA and 27 1 million in total adjusted net income.
And we've completed the merger on March 31st However, even without the marriage and we were renewing and expanding our fleet.
We agreed to acquire 11 vessels with an average date three point for years for about $360 million and.
And 75 vessels with an average age of the being here for $66 7 million.
Yes.
And he is out of all this.
Activities, a containership fleet capacity increased by three times, what we need to use the average age of our company saved by 11%.
For the dry bulk segment, we increased capacity by two and two person and they do use their average day by 14%.
As an update to our debt facility.
And almost 500 million and new financing year to date $200 million of weight will be used to refinance existing facilities and 300, and maybe I don't know, which will be used to finance new acquisitions 200 million over these new acquisitions will be on bareboat.
Moreover, these.
And now we have no significant debt maturities until 2020 three.
Additionally, we have strong cash flow potentially for the remaining nine months of the year, we'll have 22949 available day.
Current contracted revenue exceeds the total fees expenses by $21 2 million and about 40 per cent of our available days are open or index linked and.
And yet to generate significant additional free cash flow.
Slide eight for this describes our fleet renewal and expansion as I mentioned previously and 89 vessel fleet is stopped and among globally promulgated dry cargo fleet, we acquired 29 container ships, whose and budget. We are acquiring an additional 11 vessels.
For Silicon Valley, and $60 million, while sales and five vessels for $66 $7 million since the end of 2020.
Felipe has grown by 65, pushing for 35 vessels diving into each vessel class NMM container ship fleets got by this has grown by three times, while at the other day has reduced by 11%.
And then and men dry bulk fleet capacity has grown by 22% while the average age has reduced by 14%.
Slide nine dives into the due date for a $500 million and you'll find that behaves and that they've got that bonds and lithium.
We are refinancing all debt that was my joining in 2020, one of the 500 million and new financing.
And 200 million will be used to refinance existing facilities and for the kind of Amelia and to find new vessel acquisitions, and Moreover, post this refinancing we have no significant debt maturities until 2020 three.
And I turned it into operating cash flow for the remaining nine months of 2021 68 per.
And of other available days are fixed at an average rate of $20000 net per day.
The remaining 39, 2% while available base, either open or index linked debt.
This provides us with significant additional upside.
Contracted revenue alone exceeds the adult and lifting make sleep expenses by $21 $2 million.
It's a simple calculation.
Calculation to share cash flow protests and given the current market average.
Daily charter rate of $29839 per day, and a valuable data that we believe and their members is well positioned for a strong 2021.
And I think 11 shows our liquidity position as of March 31st 'twenty 'twenty. One we'll have total cash of $51 4 million and total borrowings of seven accounts and.
And the $1 $2 million.
Our net debt to book up of delays Asian is 38, 3% and net debt months truly asked I get with nausea, and extend debt maturities until 2020 Sydney.
At this point I would like to turn the call over to Mr. Stratos <unk> Navios partners CFO, who will take you through the financial results.
First quarter of 2021, but other finger <unk> good morning.
I will briefly review along with each one and those are the results for the first quarter and at March 31st proposal for and do you want.
The financial for Michigan.
And some other items a slide presentation are available on the company's website.
I'm going to like you mentioned earlier the method would leverage completed was completed on March 31st.
Ladies and the balance sheet and medical David.
Together with expected purchase price allocation adjustments are included and members partners and voluntary proposal would be and of the quarter.
However, the results of operations for Q1 do not include the introduction and beverage containers, and which will be critical months for moving Chris.
You may begin to understand better for equal Brandon we are presenting the results of operations for Q1 granted 51 for book lovers, published and leverage containers as well as the total results of the current because I'll be forgiven.
This is motive and <unk>.
For additional Navios partners going forward, the below for judicial discussions with Google and sort of goodwill.
Moving to the other trial related to slight growth.
Revenue for Q1, 2021, with a 100 day.
Good day.
Approximately 60% operating income from other partners, whereas the remaining and the revenue with leverage for payments.
EBITDA and net income for Q1 growth and greater one include $88 million of gain and evaluation of our investment and others for payments as it is underway.
I would like to point out here, but in 2019, our investment was written down by $42 6 million.
Also included in EBITDA and net income and Q1 continued through Q1 is a $44 1 million gain from the completion for merger and the purchase price allocation to be assets and liabilities you'll notice for payments.
Excluding these items put on the debt.
EBITDA for Q1 per multiple could appreciate your point for you.
Which Turkey for reported seven mutual Crimson and leverage partners and $22 7 million promoters for payments.
Moving on adjusted net income was $7 1 million.
During the quarter, we had a total of 6008 covenant and delivered and available days with a fleet utilization of approximately 99%.
Turning to slide 15, I will briefly discuss on Kibali current data and as of March 30 principal payment for anyone.
Cash and cash equivalents were $51 4 million.
Long term borrowings, including the current portion of deferred fees amounted to share recovered 140 per million.
Net debt to book capitalization and reduced to 58, 3% reported.
Yeah.
Slide 14 shows that the digital for Ya.
Our fleet is and the Doctor and publicly listed dry cargo fleet globally as measured by number of visits.
We have a large modern diverse fleet and <unk> nine vessels with a total capacity for $8 2 million deadweight tons.
Flip quarters for 51, global Richardson and 58 contributors.
And slide 15, you can see up top and strategy for the remaining nine months of 2000 and bring to us.
David if I flip and allows us to take advantage of the developer momentum.
The operating to maximize profitability.
We have currently 68% of our grid for 2000, and then come and 49 available days for the remaining nine months of grid and grid.
And one.
We have capitalized on the strength of the containership market and fixed almost 90% of available available containership days enjoying healthy rates.
Currently we are positioning our Drybulk fleet for what we hope will be a strong second half of 2021 and we have market exposure on chips with reported for pursuit of updates.
And slide 16, you can share what ESG initiatives.
And I and shipping is the most environmentally friendly mutual transportation.
For the most capable and efficient mode of passports.
And we aspire to have zero emissions by 2050.
And this process will have been pioneering and we are adopting certain environmental regulations. After two years and the funds aiming to be one of the first day to achieve full compliance.
Maybe this is for social and corporate group, which core values and glue diversity inclusion and safety.
We have registered and corporate governance and clearer code of ethics are bullish component for a majority of independent directors and independent committees lebovitz share and monitoring and remediation.
I know part of the call to George I noticed executive Vice President of business development to discuss the industry section George.
Thank you for Stratos, Please turn to slide 18.
And with the help of a strong second half 2020 ended the year with EBITDA, averaging 1066 today. The BPI stands at 2889 with a year to day average up over 200 per cent compared to the same period last year and the highest and that has been and 11 years.
Governments, having put in place and emergency monetary and fiscal plans to support their economies.
Kickstarted faster than expected recovery and the world economy.
This has led the IMF to increases in 2020, one while GDP growth projections to 6%.
Highest and 50 years and they're further for 4% and 22.
And that demand and restocking is expected to push demand growth well above net fleet growth supporting there isn't dramatic rise in rates.
And what is lower margin seasonal low period, and all asset classes have risen sharply, reflecting searching and paid driven by strong demand for both major and minor bulk commodities.
Q1, 2021 average rates are the highest since 2010.
Try 21, dry bulk trade growth projections were recently revised upwards to three 8% and one 9% increase and 2000 and tool.
Turning to slide 19 day.
Minus forecast for outpaced net fleet growth and both 'twenty, one and 22.
The graph on the left shows that for 2020, one dry bulk demand for the three major cargoes for by a raw coal and grain is for customer increased by 4% compared to try and truck.
If you look at the graph on the right net fleet growth is forecast to be two 8% this year and 1% for 2000 and tool.
Net fleet growth is expected to remain lower for the next few years as the order book is the lowest for Edwards.
And to slide trade day, despite the pandemic global light, although demand is expected to increase by three one percentage this year.
Additionally, reliability of iron ore shipments for China are expected to increase as still remains replenish stockpiles and driving demand for capesize vessels.
<unk> forecasts are also for growth and iron ore imports are out of the world and.
The effects of the pandemic recede.
Europe's imports are expected to grow by 17% and Asia, excluding China.
Expected, three and 412% more iron ore and credit to Antoine banking credit trends.
Please turn to slide 21.
Asia, and coal imports, which account for over 80% of the world Seaborne coal trade is expected to increase by four eight per cent and to anyone following a decline of six 5% and transit revenue per trade.
And <unk> decrease was mainly attributed to Indian and Chinese imports declining by 11% and eight percentage respectively.
Vietnam and other southeast Asia countries increased coal imports by 11 percentage kind of 'twenty and all.
<unk> debt to <unk>.
Further increase imports by eight percentage gear.
Turning to slide 22, and ever increasing world population food security issues, driven by the pandemic as well as anchors and protein and demand worldwide continues to support the global grain trade.
Volume all grain production this year, where each airport according to international and grains Council and the USDA.
Worldwide grain trade has been growing by 5% CAGR since 2008, mainly driven by Asian demand, which increased by 14, 4% in 2020 and is expected to increase further five 5% in 'twenty one.
Overall product, while grain paid increased by seven 1% and credit quality and is expected to increase by two 5% and 21.
Please turn to slide 23.
The current order book stands at a record low of five and 5% of the fleet.
And contracting was down 49% in 2020 compared to 19.
Through the end of April 'twenty, one contracting is down by about 17% compared to the same period last year.
Accordingly credit trends.
And one net fleet growth is expected at two 8% and 1% for janitorial and <unk>.
No debt projected increase in dry bulk demand for both years.
Turning to slide 24.
Sales over 20 years of age.
<unk> seven five per cent of the total fleet, which compares favorably with the previously mentioned record low order book.
Wrapping totaled $15 8 million tons and credit 20, almost double 2019 total.
The year to day scrapping has pulled out for 3 million tons, which is on pace for a total of 14 million tons.
Please turn to slide 26 focus on debt container and Betsy.
As previously mentioned stimulus measures have caused and recovery of consumption and GAAP, France economies at the same time debt base increasingly industrial production and economic growth and China.
These targeted and removes has led to a historic turnaround and global container trade.
As you can see and the chart on the lower right freight rates for all.
In other words from China rose dramatically for midyear training transient.
Increases in consumer demand for goods and port congestion and a stocking led to a containership demand growth of 6% and 21 and three 8% and training tool.
The increased demand is expected to exceed supply and both years.
Please turn to slide 27.
And you said the rapid market recovery has close to extremely high demand for available tonnage.
And in short supply across all segments and <unk>.
Particular, the extremely tight availability of panamaxes combined with poor congestion and cough.
<unk> paid and lack of new buildings as propel period.
Time charter rates hit 16 year highs of 43, and 5% EBIT dollars per day for periods up to eight year.
S. EFI bulks rates have climbed to 164% from April 2022 April 'twenty one.
First by the earlier you start of the Chinese economy, and from continuing demand for consumables and pandemic related suppliers worldwide.
And slide 28.
Low container ship ordering for the over the past two years.
Set the stage for a manageable fleet growth of four 3% this year and two 4% index.
Even in this high demand environment scrapping will continue at eight 4% of the fleet is currently 20 years of age or older.
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 container price scraping industries and their continued effort and navigate through their easing pandemic storm.
And this concludes my presentation I would now like to turn the call over to <unk> for final comments and get again.
Thank you George.
This concludes that for months.
We open the call for questions.
At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Want to ask a question, we will pause for just a moment to compile the Q&A roster.
For first question comes from the line of Chris Wetherbee with Citi.
Hi, This is Lee and I'm on for Chris. Thank you for taking my question.
So and <unk>.
I just wanted to ask about your fleet renewal program. I know you guys have been very active with vessel purchases and sales so far and 2021, but I just wanted to understand but after taking into account. All these transactions do you believe that your fleet renewal is largely complete at this point or do you still believe that you have a lot more.
For transactions that might need to take place before you can get your average age for vessels down to the level that youre looking for.
I think.
And maybe.
And.
You'll have and.
And then and you have that sleeping and Johan.
And and the business small day, and basically and they drive.
Thanks.
And so what we are doing it would have been and.
And of course, we are taking note of and vaccines without giving you don't get aggressive and we are positioning and portfolio.
And you'll have seen that and we have been extremely busy and that has provided us.
And great strength I mean.
We are going to shake loose and container and.
And that market and dry bulk market share.
And dynamic.
Having just gone Dana and market that.
And that's easily.
And it would have seemed and different dynamics and shipping.
Hey, Matt.
Margaret Zone about finished and.
And it used to be in them and give me all day.
What day.
And based.
And I have both active and Cleveland knowledge about all this and electronics.
Electronics and that made it and there is more to come from this and this is a market that is more all the time charter market, beating of the market and you have seen we have taken a good advantage doing almost 90 per kind of odd days and weeks there.
And we are also in debt.
Yeah bulk market and area.
And that early stage of recovery about commodity is about not only the foodstuffs and security for security and that also.
And that's how most people adoption. So this is an area, where we see a lot of upside and coming and a day.
We have over 60% of other day.
Available day open is a market that is more augusta them for support and the index developed markets and.
And that's where we see that the cash flow gen nasal and can be quite significant.
And it's based on housing.
All of these segments and also for them.
And where we are in the different segments.
Okay.
Okay that make sense.
And just kind of following up on simple points, you mentioned about the containership market.
So I know that 89% of your days for 'twenty, 'twenty, one and our fixed but I'm just I know that also the rates of serious recently, so I'm just kind of wondering.
If you could explain a little bit more about your chartering strategy and given the recent surge and rates are you guys looking to lock in those vessels.
Multi year charters are you just still trying to argue more interested and keeping them on relatively short term charters. They still take advantage of any potential further increases in rates.
That's a very good question.
We are capturing day with cash flows and we have seen that he has done for good. Thank you for your thoughts.
And you've seen the 40 and we have been able to go through these and all of it yet, but you will have to have it sounds like they contain and market.
Is it time charter market.
And that the portfolio will net.
For the export market.
I'm sorry.
You want to see that.
But on the export market and dry box, where you can have and music.
And the vessels whereby at the premium for the index.
So you have every day.
Hey, John can maybe and then.
Hey, Joe.
Italy.
<unk>, you'll have and here on the marketing growth.
But the market and what they would be.
Apio Jonathan on the container market you don't have the spot market that we have on the dry bulk.
And all of these monitoring these available today and creating the sidewalk is growth.
Done and provides us now to be with 9000.
And then.
And then you have about.
9000.
Open and index day by day.
Average.
The market and then they go out.
And 20.
And 99 almost 70000.
And.
And the dry bulk is something you've got to you got any sense every day and.
You guys, absolutely peptides and <unk>.
Joining me every day.
And basically.
Good day by day.
Okay. Thank you and just one final questions will come more from a modeling standpoint.
I know that you have about 14000 days fixed at 20000.
And per day, and then about 9000 open as you as you mentioned should we be thinking that your average combined TCE rates should be above 20000 per day for the remaining quarters for 2021 based on the current rate.
Market and fix.
Stays as well.
And then as it relates you mentioned Youre seeing page 10, and based on the current market.
Good day rates.
The average.
And at the open days alone fleet as other.
And almost $80000 per day.
Assuming that this market will continue with this is this is going to be the mix of our fleet, but as I said I mean, depending on the strength of the money.
Okay.
Alright, Thank you for taking my questions.
Okay.
Your next question comes from the line of Randy Gibbons with Jefferies.
Hi, This is Chris Robertson on for Randy Thanks for taking our call.
Good morning, good morning, so I'm, referring to the very active.
S&P market you guys are involved in do you expect debt youll continue to be active.
And this is going to slow or are you still out there looking at potential acquisitions.
And lastly, what was the reasoning behind the sale of the.
And the dedication.
Is it always is.
We have and portfolio and the portfolio.
The next day.
And where you buy and where your share.
And I may make sure relative to what you thought you create and very comfortable.
And the highly day.
Makes SaaS and take advantage of the opportunity because you've got it deployed and an asset that you can actually see.
And there are.
And that.
That is worth.
Jason and and Greg and that you May say everyone's I think about the rate that is above the median level.
The last day.
And happen and you can't time, Jamba and other vaccine for about 45000 and Florida.
And non CD. So it is and the season is economic rationale whether it makes sense depending on conditions.
Okay, that's fair.
So.
I guess with the balance sheet and great shape the merger completed.
The new vessels acquired.
Going forward, what will it take to increase the <unk>.
Distribution and how do you think you will balance that with unit repurchases unit repurchases now that you are trading at a discount to NAV.
I would say that and this is something that day.
Great.
And then maybe late stage of recovery and segments.
Have been on the last several years.
And in markets and arena.
And market that would be severely.
Greg.
Basically you are clean.
Early stage for that.
We like.
We see that day is a great opportunity beyond that any service that we provide.
Right.
Two items.
And that money today.
And also.
Because the cash flow will be generated.
Slide seven weeks ago.
And by any measure.
And also the other issue that we're looking for a lot is about and low leverage today and we have a low leverage.
And and this is it too.
<unk>.
And do things and we have navigated.
And so the music your cash flow for us and <unk>.
And making sure that we have.
And then and.
As I said weighted and then any stage of the recovery and also keeping and known there.
That will provide us with data and they were very honest.
Skype.
Okay and last question for US just in terms of operational strategy for those drybulk vessels that are on <unk>.
And days.
Or expiring in the coming months, what's your strategy in terms of spot versus longer term time charters for those.
On the dry box more spot market. So I will say that day realities that you will see we are doing index.
Dry bulk market.
<unk>.
And the index market that is very way.
And do you have that.
And <unk> and <unk>.
We have we monitor very well now for the fall.
And in English, which basically initiate every day.
And we usually have one day.
Digital sales.
Yes.
And I believe for any quarter.
And yet.
And don't seek.
Basically.
And what we will see on the dry bulk.
And we see that.
And.
<expletive> Weil.
Yes.
But these day we.
We're using for loan growth.
Is weighted relative index and you have the ability to capture the upside is and market extending out.
Got it thank you.
Thank you.
At this time there are no further questions I will turn the call back over to Angela for closing remarks.
Thank you this completes.
Q1 results. Thank you.
Thank you, ladies and gentlemen that does conclude today's conference call. We thank you for your participation and ask that you. Please disconnect your lines.
[music].