Q2 2021 Navios Maritime Partners LP Earnings Call
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Thank.
Thank you for joining us for Navios Maritime partners second quarter 2021 earnings conference call with the pay from the company of our chairman and CEO Ms. Angeliki <unk> Chief Financial Officer, Mr started the fabric and executive Vice President of business development, Mr. George at the OTA as a reminder, the conference call is being webcast to access the webcast. Please go to the investors.
[noise] section of Navios partners website at Www Dot Navios Dash and L. P Dot com, you'll see the webcasting link in the middle of the page and a copy of the presentation referenced in todays earnings conference call can also be found there.
Now I'll review the Safe Harbor statement. This conference call could contain forward looking statements within the meaning for the private Securities Litigation Reform Act of the 1990.
5 of that Navios partners for looking statements are statements that are not historical facts such forward looking statements are 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.
Such risks are more fully discussed in Navios partners filings with the Securities and Exchange Commission.
Commission the 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. The agenda for todays call is as follows.
For this Bangalore for opening remarks next Mr defeat Brits will give an overview of Navios partners financial results then the draft notice will provide in the.
We're not updating the 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. Angeliki <unk> Angeliki. Thank you Laura and good morning for all of you will join US on today's call I am pleased with our results for the second quarter of 2021 during the second quarter amount of interest.
This breadth of that going through the revenue of $152 million.
Net income of $99.9 million.
As you kind of see on slide for approximately 56% of our fleet.
The 9 bulk Vasily.
44% of our fleet.
The initiatives.
Please turn to slide 5 Navios partners adopt than.
And then U S probably the least of drag goggle fleet with 98 vessels.
55, dry bulk vessels and for Disney our container ships are diversified fleet should issue related.
For the industry cyclicality, you can already see the flexibility created by the defense segment as we add the open a variable base and financing.
We have about 1 point of the line.
The dermis and contracted revenue contracted revenue for the simple.
Thank you.
'twenty 1 is expected to exceed the total estimated fleet experiences for the same period by 47.8 million.
These enable us to cover about 36% of our available days either open or index linked we have a strong balance sheet with low leverage.
Average price.
As a result of all of these factors are units per.
Formed way in 2021 year to date.
Slide 6 the ease of use.
The rate during Q2, and the men DMA $80.94 million in EBITDA.
$99.9 million.
In net income and for $32 per unit.
We will continue to renew and expand the fleet, we agreed to acquire 11 vessels with innovative date of for Aps for about.
5 continents.
$62 million.
And the agreed to sell 2 vessels with an average days of $15.7 year for $41.4 million.
As a result of fleet renewal and expansion program and year to date, we added a net of 44 vessels to our fleet.
<unk> and container ship the fleet increased by 330% while average 8 reduced by 25% are the right.
Bulk fleet capacity increased by 37% why is the average age of the reduced by 18%.
We had asked about 6.
Government 15 million in new financing year to date.
Including 400 of 5 million to financing the acquisition of $124.3 million to truly define Nash 'twenty to 'twenty 1 maturities.
The $86 million to refinance the loan.
The strong cash flow per.
And for the second half of 2021 we have 15000, several kind of the 43 of our level of base.
Is about 36% of while available these days as the <unk>.
Open for index linked.
Slide 7 highlights the diversification of advantage because the opening.
Passing both the dry bulk and container ship segment, we should be able to mitigate normally indebtedness at the guidance the deleverage fundamentals across both sectors and a use of cost of capital. This has created Optionality for example.
Chartering strategy Optimizes the first.
For the amendment with our container ships, we have fixed on medium to long term charters over 99% of all of our level of data for the second half of 2021 and 78% fixed for 2022, however, the other.
And the dry bulk sector combined strengthening.
For the first golf to end of 'twenty 1.
Maximize market exposure during the day month brands of 63 per cent of our available days in that.
Second half of 'twenty, 2 and beyond and about 94% for available days in 2022 open or the index linked to the diversified strategy.
We have saved more than $1.1 billion in total contracted revenue.
Dave described figuring northern expulsion of the year to date in 2021 year to day.
<unk> increased by 8.1% in terms of a number of the red for before net debt.
The shift.
The we acquired the exam from the water and then the additional testing new building brand to be delivered into our fleet.
Also are going to sales 7 brands with another day of.
The pinpoint 7 yet for $108 million in profit through these activities. We increased our go day makes it the fleet.
But the third.
And in.
In the dry bulk fleet Goodbye Goodbye 57 per cent. Moreover, we have successfully reduced the average age of our fleet. The Bulls segment, 25% of reduction in container ships, and an 18% of adoption and drive back slide.
Slide 9.
We think our operating free cash flow for the second half of 2021 about <unk> 64 per cent of what I've heard of Labor day.
The average rate of $22919 Brent day, our contracted revenue exceed total estimated fleet expenses by 47.
And many of them.
They remain the $36.1 per cent of our available days are either open or index linked which provided market exposure slide 10 shows our liquidity position as of June 30 of 'twenty 'twenty..1 we had total cash of $232.9 million.
The dollar.
And total boiler and $795.5 million.
Net debt to book of it'll aviation is 27, 3% and the debt maturities are staggered with no significant debt maturities until 2023.
At this point I would like to turn the corner over.
To assist the other 50 please no.
And the obvious Bob and the CFO, who will take you through the financing zone for the second quarter of 2021.
Other.
Good morning.
Our VP of your other mortgage financial results from the second quarter range and for the company the June kind of between 21.
The financial information.
<unk> is moving in the press release and some other than the slide presentation available on the company's website.
Before I discuss the results I would like to remind you that the members of the leverage containers, which have political amongst the depressed. Consequently, the results from the first half of 2021 includes the results of lettuce containers quarterly from the second quarter.
Moving to the highlights on slide 11.
For the second quarter of 2021 increased by 227% the $152 million for political decision of coffee from for the second quarter of 2020.
The increases were mainly due to the volume returns and 90% of increase in available days of the quarter following.
The merger with leverage of containers and the expansion of our fleet and non Shaw and into a 1% decrease from the time charter equivalent achieved in the quarter for <unk>.
Both of which will be the last year.
Adjusted EBITDA for the second quarter of 2021 increase of $90.4 million compared to $14.3 million in the second quarter of 2020, primarily.
The increase in revenue as discussed above.
This increase was mitigated by $19.8 million increase the vessel operating expenses and the $3.3 million increase in G&A due to lung.
Our increased fleet and the $6.2 million increase in net other expenses.
Net income for the quarter amounted to $99.9 million.
Fleet utilization for the second quarter of 2021 was almost 100%.
Moving to the 6 month of operations as I mentioned earlier the discussion below exclude the results of Navios containers for Q1 of 2021. Other merger was completed in March the depressed for.
For the first quarter of 2021 Navios containers.
Many of the recorded $48.8 million of revenue and $22.8 million of EBITDA.
Time charter revenue for the 6 months increased by $124.1 million for $217.1 million compared to 93 million in the first half of 2020.
The increase was mainly due to the 66, 8% increase of the tanks.
At Ada equivalent achieved in the current half of 2021 other.
1 of the 41, 4% increase available day.
EBITDA and net income for the first half of 2021 include $88 million of gain from the revaluation of our investment in Navios containers as a result of the merger.
I would look.
The other doubt share that in 2019, we havent been dollar investment by $42.6 million.
Also included in the EBITDA net income in the first half of 2021 is the $44.1 million gain from the completion of the merger and the purchase price allocation for the assets and liabilities from the containers.
Excluding these items.
The rest of the EBITDA for the first half of 2021.
$124.1 million compared to $58.4 million in the same period of last year.
Adjusted net income for the first half of 2021 amounted to $111.7 million.
Turning to slide 12.
I will briefly discuss some.
Advance of data as of June 32021.
Cash and cash equivalent of $232.9 million.
Long term borrowings, including the current portion of net of deferred fees amounted to 795 and half of the year.
The net debt to book capitalization, the reduced dependence of 7.3% of the end of the quarter.
Sure.
Slide 15 shows the details of our fleet.
Our fleet is in the total U S publicly listed dry cargo fleet as measured by number of vessels.
We have a large modern diverse fleet of 98 vessels with the total capacity of $9.3 million deadweight zones are for.
It consists of 55 dry bulk vessels and portable containers.
In slide 14, you can share with ESG initiatives maritime shipping of the most environmentally friendly mutual transportation assets.
It is the most scalable and efficient mode of transport.
We aspire to have zero emissions by 2050 in.
In this process, we have been pioneering and are adopting center certain environmental.
Durations up to 2 years in advance aiming to be 1 of the first fleet to achieve for compliance.
Navios is a certain conscious group, which grew by using the diversity inclusion and safety we have the.
The strong corporate governance and clear code of ethics are enormous composed by a majority of independent directors and independent committees lot of.
Sales of management and operations I know for sure.
The board of the Georgia, <unk> Executive Vice President of business development for discussing the per section. Thank you Travis Please turn to slide 16.
The public exchange value Index H 3000 of 418, 1 June 29 of the highest level since 2010 net earnings.
Earnings for the sub Capesize.
Mental as vessels the multiyear highs.
2793 of the Q3 index average was more than double any Q2 quarterly average in the past decade.
Sales in all asset classes have risen sharply reflecting strength in trade driven by strong demand for both major and minor bulk commodities.
Supply and demand fundamentals going forward the remain extremely positive and strong demand for natural rates any store sales combined with COVID-19 related logistical disruptions, we jobs to fleet and the efficiencies and slowing pace of new building deliveries will support strong level of support in future freight rates.
Yes.
The IMF projects global 2021, GDP growth of 6% the <unk>.
Rising 50 years led by an 8.6% expansion in China, India and developing Asia.
Accordingly, 2021, dry bulk trade is projected to increase by 4% and further increased by 1.7.
And then in 'twenty 2.
Turning to slide 17, the <unk>.
Mine is for cost of outpacing net fleet growth in both 'twenty, 1 and 'twenty 2.
The graph on the left shows the dry bulk demand for the 3 major of cargoes of iron ore coal and grain for the second half of 'twenty..1 of these forecast of increased by 7% compared to the first half.
7.
The graph on the right highlights the previously mentioned slowing fleet growth net.
The growth is forecast to be of 3.3% this year and only 1.2% for 'twenty of tool.
Turning to slide 18 post pandemic stimulus measures in the advanced economies and increasing industrial production of economic growth.
Growth in China has fuel demand for iron ore and.
Global Iron ore demand is expected to increase by 3.6% this year at.
Additional availability of iron ore shipments to China in the second half of 'twenty, 1 I would expect it to increase of still makes the replenish stockpiles.
Moving demand for Capesize vessels.
For cash.
Costs are also for growth in iron ore imports around the world as the effects of the pandemic losses.
Europe's imports are expected to grow by 18% and Asia, excluding China.
<unk> is expected to import 12% more of our borrowing 21 pending 2020.
Sure.
Please turn to slide 19.
Asian coal imports, which accounts for over 80% of our 1 seaborne coal trade are expected to increase by 3.7% in 'twenty 1.
According to the International Energy Agency Global coal fired electricity generation is expected to rise by nearly 5% of this year and exceed pre.
Pre pandemic levels before increasing afraid of 3% to an all time high in 'twenty 2.
Turning to slide 20.
An ever increasing world population for us.
The food security issues, driven by the pandemic as well as increasing protein demand worldwide continues to support the global grain trade.
Walgreens production of this year will reach record according to the international grains Council and the USDA.
Worldwide grain trade has been growing by 5% cognizance of 2008, mainly driven by Asian demand, which increased by 15, 5% in 2020 is forecast to grow by a further 6.9.
Percentage of 'twenty 1 of.
The 1 goes on.
The grain trade is expected to increase by 4.4% in 'twenty 1.
Please turn to slide 21.
The current order book stands out of the historically low of 558% of the fleet.
Contracting for 2020 and year to date.
Find has been low about equal to 1 contracting in 2019, Accordingly, 2020 of our net fleet growth is expected at 3.3% and only 1.2 per cent for 2020 below the projected increase in dry bulk demand for both years.
Turning to slide 22 the vessels.
The company years of age of about $8.7 per cent of the total fleet, which compares favorably with the previously mentioned historically low order book scrap.
The scrapping totaled $15.8 million tons in 2020, and the year to date has total of 4.7 million tons, which is on pace for a yearly total of $8.6 million tons.
Okay.
Please turn to slide 20 for portion of the container industry.
Stimulus measures have caused the recovery of consumption in the advanced economies. These targeted stimulus has led to a historic.
In global container trade.
As you can see on the chart on the lower right credit rates for 1.
The roads from China rose dramatically from meet the year 'twenty.
Increases in consumer demand for goods.
Port congestion of restocking led to containership demand growth of 6.3% in 2021 and 3.8% in 'twenty 2.
The increase the minus expected to exceed supply.
In both years.
Please turn to slide 25.
There isn't an IBD market. The Calgary has caused the extremely high demand for available of tonnage, which is in short supply of growth across all segments. In particular, the extremely tight availability of panamaxes combined with poor congestion increasing trade.
The main and lack of new buildings has propelled period of time charter rates to hit historic highs of $70000 per day for periods of up to a year.
The Sci Fi Bulks of AAV index has broken through the 4011 for the first time ever.
<unk> approximately 4 times higher than the 10 year average.
Spurred by the earliest debt of the Chinese economy, and from continuing demand for consumables and Democrat related suppliers worldwide.
Turning to slide 26 fleet growth as the manager of about 4.5% this year and 2.6% for 2022.
Even in this kind of demand environment the scrap issue.
Shall continue.
5% of the fleet is currently 20 years of age or older.
In conclusion positive demand fundamentals, mainly due to the start of economic activity around the world.
Along with reduced clearly the liability should continue to support both the dry bulk and containerized shipping industries in the economy.
Continuing the effort to navigate through the easing pandemic store.
This concludes my presentation I would now like to turn the call over to and get the gear for her final clients and Geely.
Thank you George.
We open the call for questions.
At this time.
To ask a question. Please press the star and 1 on your Touchtone phone you may remove yourself from the queue at any time by pressing the alky. Once again that is star and 1 if you would like to ask the question and we will take our first question from Randy <unk> with Jefferies. Your line is now open.
All of the 18 Navios how's it going.
Good morning.
Alright, so a few questions here I guess first just looking at your chartering for the container ships you recently booked 5.
4500, or so teu container ships from 3 year charters.
Really.
Very impressive rates of about 40000 of day 2 questions with that how did you decide on the staggered or maybe stepped down annual rates structure for that and then secondly, you have 2 container ships with charters expiring in December when do you expect the book New charters on those 2.
Very good questions I mean literally it see what we have been doing we are actually with the all the position as I've done on the the company. We are basically we have created the sizable fleet of 98 vessels.
And the almost the Honda and then we're using the different industries from.
The mandate that we have to create the optionality on the balance sheet of the company. So we have a 55% of dry bulk of 45 per cent container ships. So what we are doing is we paid in cash flow we do.
The medium term cash flows on the target.
For she babies.
And the world, whether it's creating the that would give us.
The company will have the sport of dry bulk vessels.
We have long term and create the.
The upside for that so our goal is to create these long term durable cash flow.
Of course, everybody bye.
That is.
The outlook and as the my choices as we see vessels coming close who will do it in the moment of strength that is always the way.
I mean, that's all of the range. What is very important is that we are mindful of abstraction and we're positioning the company for the long term.
Sure.
All of those 2 charters expiring in 4 months 5 months, maybe it seems like Theres already a market for those are those being negotiated now are you waiting until the fall.
You know we are doing in the portfolio approach, we will always talking.
And of that these out of a job.
And we believe in the more appropriate on the.
9 of the has the biggest need so we have done that the news I think in the very good way and you have seen the not yet I mean, you know and you can see the other way we have.
2 of the type of portfolio, we are able to create these cash flows because we would never have.
We then stepped in very quickly and we will do it.
On the strength anything of the market and we see strength in all of the market.
Okay.
Alright, and then I guess secondly, you Don mentioned the ATM result.
In the press release, but I do see that net cash provided by financing activities was up $258 million. So I guess with that how much of both the 75 million and then the $110 million ATM programs have been used so far is there any remaining and then what is the current.
The outstanding unit count just for modeling purposes.
Yeah, Hi, Andy Good morning from your true.
It will have.
We will have all the details on the you know the number of the units issued in the units of lending as well as the guidance assumption of the ATM program.
6K filings.
Current shortly however, what I can share with you on the school is the fact that you know practically the AEP.
The EMS programs have been practically completed the by now for sure.
Maybe moving 1 of the moms.
Okay, and then the assuming 25 or so dollars of share it seems like.
That moved around.
6 and a half 7 million shares is that fair on the new share count.
The rule Youll have all of the details of the filing true.
Be patient per month.
Okay I'll wait on that.
For 2 more questions I guess looking at your vessel fleet changes you've.
That would be of active in acquiring vessels of late do you expect that to continue or are you going to focus more on maybe selling some older vessels, which you already have done a few here just looking at it kind of changes in your fleet going forward.
Okay.
This is an ongoing losses, meaning.
Always.
<unk> been pretty and we have been getting good prices on the all of the fleet, we have disposal of diversity and the nice ordered we have some vessels that day you know this is an ongoing effort.
The <unk>.
And all of the fleet and also we have done on the new buildings and and the secondhand acquisition of new buildings and.
And I think that is it need debt, we have I mean, you've got the CEO of containers.
For example of these.
So it's more of a oxides of the all the so we saw an opportunity and we position our sales to acquire vessels like the.
The you know for that is very good for the point.
And the non transportation like the 5200, Teus, which all of that that fleet is.
Something that the market needs of Theres, no new orders and we have been very successful and we see that the pandemic of course.
1 of them. He has created the need for this point to point transportation.
That is an area, where we stepped in.
The whole thing.
1 of these food volume and we went in.
Again you.
You know what we bid.
Actually the financing them.
Our balance sheet from the beginning and then getting the in Iceland.
For those.
Got it Okay and last question for me, we're about halfway through the second quarter can you provide.
We switched from quarter to date rates for your multiple drybulk asset classes with spot exposure Rguest index linked the exposure.
I think the Mecca of expert in that everyone has a collection of values in the I will not even compete with you guys are very good on that and you can find it.
And maybe I think the 1 thing that I would like to say is that the.
You know the company and I think it may add an important niche we.
We are the position the company for the long term.
The nuclear.
I mean, we saw equity markets close debt market.
I mean I'm available.
I mean, we had in 2019, we'll have the term loan b and basically that was not available for the dry bulk. So we have seen capesize rates last year being <unk>.
<unk> 8000 containers at the maybe.
Maybe by the markdowns 8000.
So basically the.
Pandemic had the my theory of effect on the CP. So we have position when the company. We saw the opportunities. We stepped in we acquired in the Mci that has been nicely paid dividends for us we have seen vial.
It was a nice transaction we should.
All of the city and the 5 times.
Of expansion. So our goal is to create and knocked the a company that has in the long term durable cash flows and to position the company for the loved it.
Sure.
Yeah. It seems like second quarter was great clearly the third quarter rates should.
So other than that so we will be looking forward to the next quarter Andy Thanks, So much.
But I don't do remind you last year for <unk>.
He is still here and we also the very mindful of where we are.
Yeah. Thank you thank.
Thank you.
Yeah.
Should be bands, we will turn the program back over to <unk> for any additional or closing remarks.
Thank you this completes the attitude duty zone.
Yeah.
Yeah.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
Have a wonderful.
Wonderful day.
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