Q1 2021 Navios Maritime Acquisition Corp Earnings Call
Good morning off from Grand Cayman. Thank you for joining Navios acquisition first quarter 2021 earnings Conference call. We are pleased to host this call for Makena.
With us today from the company are chairman and CEO Ms Angeliki <unk>.
<unk> Chairman, Mr. Ted Petrone, and Chief Financial Officer, Mr and me Anita its course.
I will now turn the call over to MS. Laura Jaeger Min, who will take you through the conference call details and Safe Harbor statements Laura and thank.
Casey and good morning, as a reminder, this conference call and webcast and access the webcast. Please visit the investors section of Navios Acquisition's website at Www Dot Navios cash acquisition dotcom and see the webcast link and the middle of the page and a copy of the presentation referenced in todays earnings conference call.
And also be found there now I'll review the Safe Harbor statement.
This conference call click and collect looking statements under the meaning of the private Securities Litigation Reform Act of 1995 about Navios acquisition.
Forward looking statements are statements that are not historical facts such forward looking statements are based upon the current beliefs and expectations of Navios acquisition management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements such risks and more fully discussed and Navios acquisition filings with Securities and Exchange Commission be informing.
And set forth herein should be understood and latest such with Navios acquisition does not assume any obligation to update the information contained in this conference call. The agenda for todays conference call is as follows.
<unk> will offer opening remarks, and then Mr Patrol and will give an operational update and industry overview.
Mr. <unk> will review Navios acquisition financial results and lastly, we will open the call to take questions now.
Now I turn the call over to Navios acquisition, Chairman and CEO and Ms Angeliki.
And Jamie Thank you Angeliki.
Thank you J P and good morning, Todd and he'll join us on today's call.
And I'm pleased with ice and for the first quarter of 2021 year and in Q1, and Navios acquisition reported revenue of 72 for 1 5 million and Donna and adjusted EBITDA of 29 point Hanmi and done.
And turning to 'twenty and handle the significant drop in demand for <unk>.
The need for stone banking accounts any tie.
And each cluster is amazing and inflation migrated to own and transportation to day prospects are bright and 1 day I think and remain disciplined cash.
And as our Vaccinating their population and 'twenty 'twenty, 2 and GDP is projected to grow by anonymous and 6%.
However, the guy and VLCC spot and aid remain and the.
Each operating cost slide for present, some of the company highlights Navios acquisition and for.
And finally the.
Diverse tanker fleet with an average age of 9 years I've met day. The diet Asia significantly include IBM, and 2020, 254 times compared to 818 times and he and.
2019.
And we had renewing our fleet and the capital nice money through bareboat charters.
And we have about $500 million and contracted revenue so Jonathan strategy that seeks downside protection, but the first participation and the market that shine.
Slide 5 and demonstrates the positive correlation between GDP growth and non demand as we emerge from the pandemic GDP is growing strongly and then IMS.
Recently revised upwards and 2021 what is it a big growth forecast to 6% for context. This is the highest percentage increase in about 50 year morals and the projected growth.
Would be 1 to almost 2 times debt and does it would be over there and warning and 19 seventies and should guarantee.
And the chart OLED demand and <unk>.
90% correlation to global GDP growth and wanted to own and demand is expected to grow by 6% and 2021.
And I'd say, the favorable fundamentals for VLCC and vastly as it pertains and continues to subside matching information as for paying economic activity low, but we expect these to include Oh and transportation.
And this unusual travelling and is expected to be and major demand drivers for OLED.
Demand is expected to grow at a 6% on 5.4 million barrels per day, and 2021 with Q4, 2021 oh and demand expected to ease the pandemic oil demand.
Good day trying to 'twenty, 1 we are seeing improvements and product tanker day for me.
Im glad percentage, David VLCC order book, historically, low and about 8 8% of the fleet owners and 'twenty here and <unk>.
Vlccs 820 class and zone and Im.
For the 27 times, the 2021, VLCC order book and decently and almost 30% of the VLCC fleet will be 20 plus years old.
And the next day, yes, please see the accounts at the bottom and then if we chose and 2021 on the book for Vlccs of 23, smashes and 74 of them for fees at that age 20 years or more appealing you're building. All these unexpected given the uncertainty that surrounds and Puget and the environment.
And all of them.
For a bunch of them.
And he doesn't mind and demand is also expected to increase.
Expansion of Chinese refineries over the next 2 year.
And on the top and bottom line and 77 additional growth.
And why.
And its capacity over Chinese refinery.
Slide 7 shows Navios acquisition key operational day right for Q1, 2021, we recorded a 29 point and 1 million of adjusted EBITDA and 48% decrease compared to Q1, 'twenty 2 A&D, but mainly due to the pandemic.
We saw a container fleet for $98 1 million and it was heavily baked pantheon and <unk> 7 million and desert contain debt facility during Q1.
And I asked why affiliated and non it to new building Vlccs on Bareboat charter 1 day October 'twenty, and 'twenty and 2021.
And now they do and expected to be the Liza, 1 and Q3 of 2020, 1 and wanting to 3 and 2022, we entered into an agreement to sell to.
<unk> 2003, Vlccs for 48 million and then.
They've got a banner year to date and 2020 1.
We have repaid $66 6 million credit facility and associated with our tankage there.
Additionally, in Q1, really big says do and $47 million of debt associated with our container ships and more relevant.
1 we haven't done a $10 million and they're adding 100 million and assembly facility.
Lastly, I don't think slot and he provides and nature of fixed rate and market exposure for the remaining 9 months of 2021.
Blue cash 20027 and available day.
All of these and about 53% of <unk>.
And about 14% I think was participating and I.
And note that about 47% Atlanta, VLCC days and profit sharing arrangement almost 10% of what I heard and a blood based assay on floating rate and then balanced strength is 3% and why I heard.
And on base remain open.
Slide 8 we didn't have cost for actual for the remaining 9 months of 2020 on them. We have a contract. It out 67, 1% of our Hannibal day at an average charter out and 8 of 18000 and cementing.
And that day is contracted day rate excludes potential compensating from day 1000, 6049 day adult.
And I had thought and cost for the same period is expected to be 18000 $6097 per day, we have 3009 pounds and he has 53 open plus floating rate day, which gives us a breakeven of 19008 standard and $75 per open day.
Total gross includes operating expenses general and administrative expenses interest expense and capital and repayment.
At this point I would like to turn the call over to Mr Dead wrong, and thank you Angela and good morning, All please turn to slide 10, and average acquisition diversified fleet consists of 45 vessels with an average age of 9 years totaling $5 4 million deadweight.
It consists of 12, Vlccs 10 L. R 118, and more to go.
MLR, 1 product tankers and 2 chemical tankers second for VLCC, New building backlog still live and on February 17th and is chartered out to a high quality counterparty for 10 year period and a bad.
About rate of $27816 a day and.
And then 2 Vlccs bareboat new buildings are scheduled for delivery in Q3 of 'twenty, 1 and the last 1 that's due in 2022.
And do you in 2020, Navios acquisition took delivery of 7 container ships have approximately 18004 hundred teu capacity.
Following the liquidation of Navios Europe to east.
These container ships were non core assets.
Old for $98 $1 million. Please.
Please turn to slide 11.
And at 11 details, our chartering strategy, which we use to balance market opportunity and credit risk, we seek protection from market volatility by obtaining charters of different durations in order to better manage market cyclicality and there maybe.
9 months of 'twenty, 'twenty 153, 4% of our fleets available days are fixed on a base rate.
About 14% and a base rate plus profit sharing and about 10% are fixed on floating rates.
As a result of this strategy and Navios fleet enjoys significant downside protection as well as the ability to participate and what is expected to be a stronger second half of 2020 1 'twenty.
23, 2% of our fleet days and 46, 5% of our VLCC fleet days are exposed to market rates and you remain.
9 months of 2020 1.
Please turn to slide 12.
This acquisition continues its policy of locking and secure cash flow with.
Credit worthy Counterparties are fleet has about $500 million and long term contracted revenue for research.
And fixture of the net navi velocity for a first class charter at about 16000 growth highlights the bullish outlook for the tanker market.
And note that this time try to level compares favorably with the 20 year average earnings and Mark.
2 product tankers.
We continue to extend the coverage of our.
Our fleet via new fixtures, continuations and exercise optional periods.
<unk> profit sharing and some cases.
Turning to slide 14.
Governments, having put in place and emergency monetary and fiscal plans to support their economies have kick started a faster than expected recovery and the world economy.
This has led to the IMF increased its 2021 GDP growth projections to 6% for highest and 50 years led by 8 6% expansion and China, India and developing Asia.
And I E projects global oil demand rebounding by $5 4 million barrels per day in 2020, 1 after constructing $8 7 million barrels a day and 2020.
The graph on the upper left shows World oil demand is expected to rebound by 5 million barrels and the second half of 2020 1 and.
The lower left graph shows OECD crude oil inventories falling below their 5 year average and February March and April for so long.
Largest decline coming last month.
Please turn to slide 15.
China is the world's largest importer of oil and the second largest consumer of oil importing over 70% of its requirements Chinese imports have increased about 300% since January 1 9 representing a 12% CAGR.
Chinese crude imports averaged $10 9 million barrels per day, and 2020, a 7% increase over 2019, China increased enforced to 11 7 million barrels per day and much of this year.
You can see on the table below and on a per capita basis U S. Oil usage is 5 8 times debt, China European usage at 2 7 times and World usage is 1 3 times, it's tried and it goes to world per capita consumption levels, China would require an additional 164 vlccs.
Moving all crude is imported by sea misrepresented and expansion of the existing fleet by about 20%.
Please turn to slide 16.
Since 2013, total U S and Brazilian and crude oil exports have increased by 4 million barrels per day and spa.
Part of it depends on the total crude exports from these 2 countries average 1 5 million barrels per day for 2020.
About 55% of the U S and Brazilian crude exports have gone to refineries east of Suez, particularly China and India is estimated that by 2020 6 over 30% of Asian crude oil imports will be sourced from the Atlantic Basin increase.
Increasing voyage lighting Asian countries depend on imports for over 80% of the crude consumption.
China, India, and other Asia will expand refinery capacity by $3 1 million barrels per day between 'twenty, and 2020 and 'twenty 6 representing over 50% of all net expansion.
And in particular has a growing supply GAAP domestic crude production continues to decline as refinery expansions continue China's current planned refinery expansion to 18 point for a million barrels per day capacity in 2020, 1 translates to an additional 275 million barrels of crude oil needed which would require adding.
For Vlccs to the fleet.
Please turn to slide 17.
Net fleet growth through April equaled, 1, 2% and is projected to be only 2 3% for 2020 1 this.
This decline can be partially attributed to Otis hesitance to order long lived assets and light it back macroeconomic uncertainty and engine technology concerns due to upcoming C O 2 restrictions.
Please turn to slide 18.
Our order book is 82, Vlccs or only 9 7% of the fleet is over 20 years of age total 74 or 8 8% of the total fleet, which compares favorably with the previously mentioned historically low order book.
We believe that the order book and fleet are well balanced and about 2020 and ballast water management regulations will lead to some vessel requirements. After the current disruptions, particularly those affecting Indian scrap yards.
Please turn to slide 20.
Gasoline demand has increased as COVID-19, 19, lockdowns, either and or ease worldwide and particular Chinese demand has risen above the 2019 average as the economy expands and commute commuters show a preference for driving amid concerns over social distancing on public transportation.
And recovery in the U S gasoline demand from Q2 of this year due to stronger driving activity what pushed demand close to 2019 consumption levels by the end of 'twenty or 'twenty 1.
Traffic congestion is near pre COVID-19 levels across Asia, Europe, and U S. Global jet fuel demand is forecast to increase substantially as the summer holidays approach for our U S. Air passengers have increased from 35% of 2019 levels at the end of January 266% at the begin.
And this week.
Please turn to slide 21, according to the IEA refinery capacities and expect it to increase by $8 5 million barrels per day from 2020 into 2020 6 with 90% of debt net capacity will be added in Asia and the middle East for the same period I expect to see refinery closures amounting to $3 6 million barrels per day.
This shift and refining is expected to favorite and expansion and product trading and additional demand for product tankers.
Moving to slide 22 U S crude production increased along with refinery expansions and the U S has led to product exports for the U S. Rising by 478% since the beginning of 2000 and and for the U S has become a net exporter of petroleum products and continues to export significant quantities of products for Latin America and into the fall.
Our east.
U S product exports I'll try and peak of $6 3 million barrels per day and April 2020 declined to $3 7 million barrels per day as COVID-19, Lockdowns took hold and since then U S product exports and averaged $4 9 million barrels per day, peaking at $6 1 million barrels per day for the week ending may 7.
Underscoring a demand recovery.
Events, such as the colonial pipeline close and show how closely balance EMR tanker market is with day rates on the TC 14th week jumping to the highest rate since August of 2020 before declining.
Let's turn to slide 23.
Net fleet growth through April equaled, 1.1% and is projected at only 2 4% for 2020 1.
6 8 percentage of the product tanker fleet is 20 years of age and older as of May 21.
There were 140 for product tankers on order and 609, which are 17 years of age or older. The total order book is about 24% of those ships 17 years age and older.
Thank you. This concludes my review and I'd like to now turn the call over to Lee and Aegis Correze for the Q1 financial results.
Oh, Thank you did and I will discuss if I must say the zone for the first quarter of 2021.
Please turn to slide 25, and revenue for <unk> 2021 decreased by 26% to $72 5 million for 97 9 million in Q1, 2020 neglecting the softening tanker market.
Q1 of 2021, we achieved a 98, 4% leading aviation and maritime.
And how do they believe in and for $14854 per day from 24442 doughnuts, but they achieved in the first quarter of 'twenty.
Time charter and voyage expenses were 5 we made immediately.
Vessel operating expenses for 2 and 2021 and we're at $52 5 million and.
G&A expenses were $5 1 million.
Adjusted EBITDA for Q and decreased by 48% to $29 1 million from $56 2 million of adjusted EBITDA in Q1 is going into 'twenty.
Appreciation and amortization was $16 6 million and interest expense and finance gross was $18 3 million.
As J D zone, we reported and that Jeff and net loss of $9 7 million.
And I 26 provides significant balance sheet data as of market and says 2021.
Cash and cash equivalents, including restricted cash was 46, 4 and $6 million.
Vessels net book value was $1 2 billion.
And this is Kim foreseen for $59 6 million, mainly Smith, the net book value of the 5 container and have wide volume the liquidation of Navios Europe too I would like to remind you that all of these vessels were shown in Q2, 2021 and 51, 2 and 7 million of debt associated with them was repaid in Q1 2021.
Total assets amounted to 1 4 and $6 billion.
Total debt net of deferred finance cost of 3 new agile mindset <unk> 2021, whereas 1 billion $48 5 million debt net of deferred assignment gross drawn under the and the same loan was $16 9 million net.
And did move up and <unk>.
For the issue as a monotherapy phase 2 and it will do and slightly improved to 73, 5% debt.
And that at the bottom of the slide provides the debt maturity schedule until 2020 7.
The company as of March 31st 2021 had 54 and 3 million of bank debt maturities for the remaining of the year and $602 6 million senior mortgage notes due in November and now I would like to pass the confluence and Mickey for his final remarks.
Thank you.
Yes.
Questions.
Yes.
At this time I see and wish to ask a question simply press Star then the number 1 on your telephone keypad.
And I'm showing no questions at this time I would like to turn the floor back over to Angela and good for any additional or closing remarks.
Thank you.
Yeah.
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Thanks, Brett.
Yeah.
Yes.
Got it.
Well, thank you very much.
Yeah.
Thank you. This concludes today's conference call you may now disconnect.
Okay.
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