Q3 2023 Navios Maritime Partners LP Earnings Call
Thank you for joining us.
Pardon.
2023 earnings conference call.
Today from the company chairwoman and <unk> essentially <unk>.
<unk>, <unk> <unk> and Vice chairman.
Ron.
As a reminder, this conference call has been webcast to access the webcast. Please go to name this infection or another spot news website.
W. W. W. Dot Navios dash M. A C dot com.
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<unk> could contain forward looking statements within the meaning of the private security <unk>.
1995 about his partners.
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Such forward looking statements are based upon the current beliefs and expectations of not as partners management and are subject to <unk>, which could cause actions up to differ materially from the forward looking statements.
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Understood in light of such risks novice partner does not assume any obligation to update the information contained in this conference call.
The agenda for today's call is as follows first <unk> opening remarks next mississippi's with keeping overview of not as part of this segment.
Next misfire on it will give an overview of another spot financial results.
Mr. <unk>, we provide an industry overview and lastly will open the call to take questions.
I tend to call over to <unk> chairwoman in seal essentially.
<unk>.
Good morning, and thank you all for joining us on today's call. Please.
Okay.
2023, and which were reported that Avenue.
$323 million and I think I'm gonna have about $90 million.
So please do report <unk>.
$2.92 for the quarter.
Before I provide some comments on the company I would like to share it might've, usually got the economic sentiment.
The U S economy is generally shensi, but that clouds on the horizon.
You ask a sky government that level.
<unk>.
It is engaged in quantitative died any.
East of interest in Asia, I think Saturday from that garden.
Elevated levels.
China, the world's largest consumer of commodities.
Not fighting in noticing these.
These factors.
Was he in Ukraine, and either have contributed to making this one of the most dangerous times in memory.
Despite this lousy this evening Margaret Israel, Boston healthy.
Our company's doing well and physician for along with it.
We continue to focus on things that we can control such as introducing letters being eco friendly by keeping in modern energy efficient fleet and expanding into areas, which we only promote long term prospects.
The recent bank until we enter into it with the virus.
Navios bothered.
Publicly listed company diversified.
I said glasses.
With an average age of about 9.6, yes.
We have 180 <unk> equally into three sectors based on a doctor adjusted value.
<unk>, we have about 270 million of Guy.
<unk> about 5.3% on an annualized basis gosh biopsy.
We.
[noise] position well for the fourth quarter as we have 52 million of contracted Avenue in excess of graphics.
In 2004 open index days.
<unk> basically.
We modify their navios Rebecca.
Democracy, we actually do have the equipment necessary to provide <unk> operations.
And then turned it into a five year job there was an obvious at American logistics.
<unk> is expected to <unk> <unk>.
Right about 30 million <unk> over the course of a charter.
<unk> is this thread should have an extended judicial life of about 30 here.
Please stay on the Sly date.
Provide an SMP update yeah to date 2023, <unk> 255.2 million girls bushes from the sale of 14 version.
In the first nine months of the year, we received $242 and we received said give me the balance in the fourth quarter of 2023.
Damn she'll <unk> we spent.
421.6 million for for new buildings gladly faded after that Max two vaccines and for Japanese new buildings M. R. Two version.
We also spent $28 million to apply it 2019 <unk>.
<unk> <unk>.
Previously.
We continued to walk on upstanding long term contracts.
Is that <unk>, we created 257.9 million of contracting.
Of these amount we expect to receive.
So I'm gonna $71.9 million, so five banking with another Jonathan period of 3.8 years.
In addition, we expect to receive 47.1 million from the vessel.
Placed into that that I submit this.
Finally, we expect to generate 58.93.
Three 4250 D U container ships.
Average about.
18000 after they found the net per day for 1.9 here.
This year, we were approached by you set the account of parties to enter into amendments that would relieve them of certain liability.
We <unk> this transaction at an estimated 10.2 million net present value benefit too.
Two novice.
Point 5 million of these value is that three three double 252.5 million repayment of <unk>. Four two contains the seeds and 6.7 million of this value is it worse at least get a bone to Jonathan Amendment, an extension for two container ships.
Down to slide nine.
Since I'm transformation in 2020 at financial performance has been strong.
At nine months 2023, adjusted EBITDA is 11.4% higher than nine months 2022.
Looking backwards 2022.
57% higher than 2021, and almost 570% higher.
2020.
We believe that that diversified business model can continue to perform difficult market and now does the presentation over to Mister throughout those discipline Navios partners safer Parading officer.
<unk>.
Good morning.
Please tell me <unk>, what's the deal.
Thank you for the <unk> for the fourth.
You're going to see.
We fixed a 50% of all <unk> really good days at the <unk>.
$2610 per day.
<unk> <unk> <unk>.
<unk>.
2300, <unk> index linked to use that will provide the dishes.
Please tell this lady living.
We are always the new <unk>.
Could we maintain the junk.
It is part of our strategy.
<unk> My Modernising asleep benefiting from your technologists Nikko visions with getting this kind of thing.
We have 1.7 billion remaining investment in 28, new building versus delivering properly.
27.
Most of them differently.
Replace.
Mm Containerships wait <unk>.
About 860 million would you be shipped.
Lumpkin created was Chavez.
Thinking about 1.1 billion in contact with <unk>.
<unk>.
And the tanker space.
<unk> for a total price of approximately 885 million.
We have already tried that I was dealing with this message put another period of five years generating revenues for my boat.
<unk> will complete it is June 23 with a D.
The last keep seismicity.
We have also been active.
<unk> basically a segment from Memphis.
<unk> with an average age of approximately 15 years.
$155.
We shall <unk> one of about 160 million take advantage of a stroke.
<unk> <unk> <unk> 95.4 million.
<unk> was in 19.3 years old Capesize Mitchell, which was sorted within 244 50 million.
Moving to slide when we can.
Good local employment fall asleep.
Like you mentioned earlier into city, we have created about 260 million additional contract considering.
Approximately 72 medium comes from or trying to sleep and about 40 million comes from a container ships.
Additionally, we are getting the five year contract numbers logistics for <unk> one.
But it was wonderful to perform manipulations, which is expected to provide about 50 million and everything.
The vision is expected to be delivered within the fourth quarter.
Additionally, we amended chapters for container ships.
The message, we agree that payment of two and a half.
Under the assumption of the subsurface subdivision. So currently on.
This bill payment was received in October and the result of unlimited present value benefit.
Three and a half.
For the remaining two vessels, we have agreed to come into the current update and extend the duration of the chapters.
Additional 2.4, yes.
The date of $18000 per day, creating 71.7 million a decent living room, and the resulting in the <unk> benefit.
Benefit of approximately six one centimeter.
<unk> you can see your total contract with revenue, which amounts to 3.3 billion.
The relational thank you sleep.
<unk> at 1.9 billion released a container.
<unk> 2057.
This group of call it to come to the package.
About 50% of all contact with revenue will be entered into the next few years.
<unk>, which will take you through the financial highlights.
Thank you for that does sound good morning.
<unk> are an audited financial reasons for the third quarter nine months and that's September 30th 2023.
19 information is included in the price of the list and summarize and the slide presentation available on the company's website.
Moving to the highlights on slide 14.
For the third quarter of 2023 slightly increased to 323.2 million.
Two 322.4 million for the same period.
Too bad.
The revenue for the period is understated by 9.7 million because you guys capitals required.
Revenue for our chances with the escalating rates on a straight line basis.
Available days increase by 6.7% affecting 1759 compared to 12897 for the same quarter last year.
Combine <unk> for the third quarter of 2023.
22052 per day.
7.3 per cent lower than two 320 22 levels in terms of <unk> performance, both bankers and containers enjoyed improve today's compared to the same period last year.
D C at age for the third quarter of 2023, four hours bankers increase by 26.8 per cent to $27688 per day, and four hour containers by 5.4% to 34350 per day.
Contrast, try Italy T C right was 29.5 per cent lower.
Back to the same period last year at $14139.
Monday.
And did not net income and maybe you <unk> you to the fallen games from <unk> <unk> 2024, 7.2 million for the first nine months of 2023 50.8 million and 423 in the first nine months.
22 143.8 million.
Gluten beside them suggested there'll be time for Q3, 23 degrees by 2.3% to 173.7 million compared to 177.7 million for the same period last year.
Justin <unk> 2023 degrees by 27% waited 2.6 million compared to 113.4 million.
320, 22, mainly due to the negative effects of it.
1.3 million reduction and the positive <unk> of the amortization of a favorable leases and a 6.3 million increase in our interest expanse of interest the income due to the increase in our debt levels in interest rates cause.
<unk> common unit for two 320, 20 312 point $68.
Revenue for the first nine months of 2023 increase by 16.7% to 979.6 million compared to 839.7 million for the same period.
22.
Time slot that Avenue.
These understated by 30.2 million because you guys <unk> recognition of revenue for a chat is with the escalating rates on a straight line basis.
<unk> was mainly a result of a 16.5% increase in our available days 241239 compared to 35394 for the same period in 2022.
Combined.
Right for the first nine months of 2023, what's likely know what $22242 per day compared to the same period last year.
In terms of set up or format support. Thank you sing on painters enjoyed improve the rate compared to the same period last year time charter equivalent rate for the first nine months of 2023, four hours tankage increased by 62.7% to $29014 per day.
Containers by 14.6% to 74970 per day.
For us right Sleepy C right 136.3 per cent lower compared to the same period last year.
10613 per day.
Excluding the items mentioned earlier adjusted EBITDA for the first nine months of 2023 increase by 11.4% to 512.5 million compared to 467.3 million for the same period in 2022.
I've got that and I think I put the first nine months of 2023 decreased by 21% to 250.5 million compared to 317.2 million for the same period last year.
<unk> was negatively affected by 47.8 million adoption of the positive impact of the amortization of a favorable leases.
43.4 million an increase in our interest expense net Oh interesting come due to the increased now that levels and interest rate cause <unk> for the first nine months of 2023.
18 point <unk> dollars.
To slide 15, I will briefly discuss some key balance at that.
September 30th 2023, cash and cash equivalents were 269.2 million.
First nine months of twenty-three, we paid 220 549 million a pre deliver install another capitalised expenses as can be you can program and 83.9 million probation acquisitions and improvements we.
<unk> for 237.4 million net adding 153 million cash after that payment of their respective that.
Longterm orange, including the current portion of deferred fees slightly is used to one point 93 billion.
The book capitalization.
236.4%.
Slide 16 highlights Hyundai profile will continue the versify, our founding resources between punctate unleashing structures, while 36% of our Ted has fixed interest at an average rate of 5.6%. We also try to mitigate part of the increased interest rate cause having our newest avalanche Martin.
For a floating dead by approximately 40 basis points or 2.3% from 2.7% a 2022 year and.
And maturity profile is target with no significant values you in any single year in terms of a new building program, 82% of all new building financing is already concluded orange documentation phase at an average margin of 1.8%.
During the quarter, we arrange a total of 92.3 million to refinance existing leasing facilities why are we monitors will be peace and.
Respective marches and extended maturities.
<unk> Garcia is G initiatives, we continue to invest in new energy efficient <unk>.
Use a mission through.
Energy saving devices and efficient operation.
This is a social conscience glucose violence include diversity inclusion and safety.
Perhaps thrown in corporate governance and clear code the weddings, while onboard is composed by majority independent directors and.
Nope after <unk>, but around to take you through the industry section and.
Thank you area. Please turn to slide 20 for the review of the tanker industry.
Real G. D. P is expected to grow at three per cent and 2023 and 2.9% in 2024 based on the Imf's October forecast.
There was an 85 per cent correlation of world oil demand to global G. D P growth.
Economic and geopolitical uncertainty.
I a projects at 2.3 million barrels per day increase in world oil demand for 2023 to 101.9 million miles per day.
And a 0.9 million barrels for the increase in 2024.
Chinese crude enforcement to neutralize averaging 11.4 million barrels per day through September.
A 14.6% increase over the same period last year.
Very strong first half tanker rates soften slightly S Q3 seasonality played out accentuated by reduced exports refinery maintenance an inventory drawdowns recently rates have risen on the back of rising demand and increase refinery throughput as the autumn maintenance season finishes. It's a recent Saturday in Russian crude expert.
Cuts have been somewhat mitigated by increased Atlantic exports, which have elevated volatility for the larger vessels.
21, as previously mentioned, both crude and product rates remain strong across the board.
Healthy supply and demand fundamentals minimum fleet growth and shifting trading patterns.
Product tankers are also aided by a healthy refinery margin.
Counted Russian crude export it to the Indian Ocean and the far east returning to the Atlantic as clean product Crouton MA growth is expected to increase by 6.2% in twenty-three and a further 4.9 per cent and 2024.
Similarly product ton miles anticipated increases standard, 11.3% and 6.1%.
2023, and 2024, respectively.
Trying to decide 22.
L. C. C. Netflix is rejected at 2.3 per cent for 2023, and a negative fleet growth of 0.9% for 2024. This decline can be partially attributed to Otis hesitant to order expensive long lived assets in light of macroeconomic uncertainty and engine technology concerns to the C O two restrictions enforced.
Since the beginning of this year.
The current low order book is only 2.7% a asleep.
24 vessels the lowest in 30 years vessels over 20 years of age or 14.1 per cent of the total fleet 129 vessels, which is over five times.
Turn on the slide twenty-three.
Product tanker Netflix growth is projected at 2.1% for twenty-three and only 1.1% for 2024. The current product tanker order book is 10.2% of the fleet one of the lowest on record and is approximately equal to the 9.8 per cent of the fleet, which has 20 years of age.
Older.
And concluded the tanker sector review tanker rates across the board continue its strong levels combination of below average global inventories gross in global oil demand new longer trade route for both crude and products as well as the lowest order book in three decades.
And the I M O 2023 regulations should provide for healthy tanker earnings going forward.
Please turn to sigh twenty-five to review of the dry bulk industry for the majority of Q3 normal seasonality played out assisted by unwind the congestion and soft demand outside China.
Chinese raw material demand continues to increase on the back of sustained economic stimulus and pre went to stockpiling, especially for colon, Iowa decided to <unk> to more than double from 962 on July 25th 2105 on October 18th after a recent retracement to BB I currently stands at about.
428 hundred.
With regard to Einhorn Cole Chinese continuing stimulus measures and pre went to stocking pseudocyst imports through the ear and the.
The global Grand traders impacted by the war in Ukraine shifting trading patterns toward longer haul routes.
Seaborne grain trade volume is expected to grow by 2.7 per cent and 24.
Added by Tulwar growth of 3.6%.
Going forward supply and demand fundamentals remain intact and normal seasonally stronger Q4, historically low order book declining naturally growth and tightening G. H G emissions regulations remain positive factors, which are reflected in the time charter and S&P markets.
Please turn to slide twenty-six the current order book stands at 8% of the fleet [noise] one of the lowest since the early 19 eighties naturally grows the twenty-three is expected to 2.9% in only 2.2% in 2024.
Owners remove tonnage that has been an economic do I M O twenty-three C O two enforced since the beginning of the year.
And the emissions trading system, starting in Europe at the beginning of next year.
Over 20 years of age or about 8.3 per cent of the total fleet, which compares favorably with historically low order book.
Concluding on dry bulk sector review continuing demand for natural resources congestion at the Panama Canal warning sanction related long haul routes combined with an slowing pace of new deliveries of support freight rates going forward.
Please turn to slide 28.
Container rates, although still about pre pandemic levels continue to soften on tobacco elevated deliveries and low imports by western consumers, partially attributed to the end of stimulus fueled spending and other macroeconomic issues, including inflation.
Hello trade is expected to grow by 3.8% in 2024, new billing deliveries in 24, and twenty-five will be equivalent to approximately 20 per cent of the fleet. After a recognition of 7.7 per cent. This year. This is continue to pressure rates for some time.
The Shanghai container freight index or S. C. F. I currently at 1013, which is 5% lower than opening the year at 10 61.
You're not in a graph in the lower right D. U S retail inventory to sales ratio is off the recent low but still well below the long term average.
On the lower left a recent slowdown of U S consumer purchases of goods, although it's still above prepaid nemec levels lower imports have east port takeaway bottlenecks in port congestion.
Turn on the side 29.
Netflix growth is expected at 7.7% for twenty-three at 6.8% for 2024.
Kernodle extended 26.7% against 10.7% of the fleet 20 years of age or older about 72% of the order book is for 10000 to you vessels larger.
In concluding the container sector review supply and demand fundamentals remain challenge due to economic and geopolitical uncertainties and an elevated order book over the prospect of Chinese stimulus enrolled GDP grocery, 3% for twenty-three and 2.9% of 24 [noise] provide a counterpoint for a challenging twenty-three.
This concludes our presentation I would now like to turn the call over to Angela Leaky for her final comments Leakey.
<unk>.
Okay.
<unk>.
And does that format.
Oh.
To ask a question. Please press the start and one on your Touchtone phone you may remove yourself from the queue at anytime.
You too once again that is star in one if you would like to ask a question and we will take our first question from Omar.
COTA with Jeffrey your line is now open.
Thank you Hey, guys. Good morning, and good afternoon, thanks for the update as always.
Uhm.
Obviously, the obvious has been you know focused on keeping a pretty nice and sizeable contract backlog you at 3.3 billion, which is basically you know fought with last quarter.
You've highlighted the amendment extent on the container ships charters, which makes sense given the pullback obviously in that market.
And you highlighted that they are M. P G positive.
I wanted to ask in general.
What can we expect more of these in the near term is this something that we will continue to see in the container market and then also you know with respect to <unk> and then.
Do you think that there's potential this happening with the new buildings as well or is this more of a dynamic that's affecting some of the existing tonnage that was fixed at the height of the market.
Good morning.
Actually.
Container.
Oh wait a moment so these kind of what happened.
Happened.
Counterparty who last for.
For an amendment and of course.
We only do things that make sense.
For now here, so we're very careful about that.
Basically got about.
Pause prevent MTV we.
We do not see the happening on <unk>.
Actually it was.
Counterpart.
Gaming when there was a very robust.
Things have to be resolved.
This kind of economy package anything or not.
To the area.
The sector.
Alright, thank you.
Yeah, no that that that that's helpful. Thank you. Thank you and then what's a follow up and ask about the the transfer business, which is clearly looks interesting. If you took the Vega photocall. That's an older older Super Max and you fix it for five years at that 30 million of of cash flow, obviously that jumps out.
Just given especially word drive Oak ridge have been just wanted to ask you know one.
What does it cost look like the modify the ship for that trend shipment business and then.
Also are there opportunities to do more here on that phone.
You know they they actually to be honest.
Very modest cushy than any of the opportunity we are entering a unique.
Area, we have that debate.
<unk>.
That's fine.
Uh-huh.
And yet.
Can I start with one.
Tomorrow.
And.
It was an additional tremendous benefit data.
Basically right.
And you can see more opportunities on employment or the ocean.
You know in South America to China, South America to Europe. So this can be created.
A whole sector and that we see.
You know that's a very good and a bowling.
<unk> and they are busy lately to extend the life of the asset.
Unlike.
It can be.
Yeah.
So.
Basically.
We have we get all that.
At the end and got back on the five year that we see that they can actually have a decent life.
Okay, well. Thank you that's that sounds sounds interesting and compelling so we'll stay tuned.
More to come.
Maybe just one final one you've obviously addresses on the call but also in the past you know in terms of strategic priorities.
Clearly cleveland or continuing to build backlog <unk>.
And in terms of the balance sheet is still you know the the perhaps maybe the the main priority is to delever and bring being that L. T D down to that 20th 25 per cent range.
Yeah, I mean deleveraging eh, sometimes you'll have some jazz between in Europe.
And.
And your <unk>.
Energy efficient.
And creating Daniel sectors, giving me opportunity I mean are you sure that we did the modern model.
Cloud some unique opportunities to modernize with energy efficient.
And basically they're very important part of that was that sweet actually.
Expand it and be more.
<unk> <unk>.
And that is something that.
Building.
Yep.
Great Oh, Thanks, Angela I'll turn it over.
Thank you very much.
Thank you and we will take our next question from Chris Weatherby with Citigroup. Your line is now open.
Thanks, guys I appreciate the time today I wanted to ask Angela maybe as you think about this.
So you have obviously exposure to multiple and markets here and I guess.
Each each one of them things a little bit of a different part of the cycle, so as you're thinking about incremental capital.
You want to put that to work how are you approaching yeah, I understand that the bill opportunities.
Container of the tanker, but as we're thinking about you.
Where you're putting what do you think about putting new capital work, where you'd want some emphasis to be placed where would it be.
<unk>.
Is there a lot of calculation.
Trying to see what is your best opportunity I mean, you're sure where we are located.
My name is.
Got it.
You know entering.
And your <unk>.
On that because we see.
Have their specifications that we have actually.
Okay additional specifications.
About 20, so hopefully the oil majors.
Actually expanding.
Same with a <unk> with a certain.
<unk> countered that they need especially.
Basic needs with you know <unk> has higher emissions, but they should have.
<unk>.
Mitigate the situation so.
Look at the opportunity.
That.
On uncontaminated, obviously I.
I mean, maybe.
<unk>.
And fixed at a good time.
But we always anything for you.
What <unk>.
They they are.
The locked every day, what would you give us a better.
And.
And in between providers and how to activate them. So.
Big picture is a very simple thing after activate then.
Denver and.
Have a lot of Israel.
So that you'll have an asthma attack.
<unk>.
Okay. That's helpful for you I appreciate that and that makes sense.
I guess, maybe on the other side of that coin so.
There was 14 vessels that were sold your to date.
Can you talk a little bit about how you think about opportunities to monetize some of the fleet, maybe where you Wanna deemphasize, where where does she relative value.
Actually values and charter rights today.
You know.
We have.
You see violence on.
You know <unk>.
Stop values of course.
Sir I mean.
<unk> I mean, we optimize that sleep.
And then you know the drive back you'll have more or less values and locked them and makes up the rest of approximately about 8% 90 per cent. So what we are doing it.
Basically.
<unk> what is the age of <unk>.
<unk> environment for the next couple of years, meaning that they wouldn't be.
I already have a card won't actually that will be in Europe that would be.
Eh.
They wouldn't be requirements. So you <unk>.
Makes sense.
You too.
The date.
And we haven't done that.
At about four the fifth we have.
Yeah, we should have about at least Denver.
<unk>.
Basically.
And keep the eighth.
Yes, we had the <unk> you know.
More voices in the beginning.
In 2024 draught about on the average about <unk> depends on the market, but this is approximately.
<unk>.
What I mean.
Okay, Alright, so that's the way we should be thinking about it and obviously I guess Margaret determinant, you know market.
Fluctuations will determine how aggressive you are I guess and then.
Maybe just one.
I guess, one more on all the tanker cycle as you guys think about it obviously some macroeconomic insurance you know flowing through here I guess.
You always do really nice job outlining your thoughts on what the market looks like I guess, if you were thinking about.
The potential for either a recession or slowdown materially in U S. Economic activity in demand poll kind of developed market. How do you think about that kind of plays out 2024 and influenced your view on demand.
You know today.
<unk>.
I mean, they definitely without a dolphin.
On the interest rate and but we don't see education today that but you also have a big effect from there was in Ukraine and.
Basically <unk> added to that don't mind.
That doesn't change if we continue.
<unk> <unk> <unk> <unk>.
And this is without taking any consideration of any potentiality.
And I don't know how that will be <unk> visa option because of the visa and that's gonna have quite technically you'll forget the area has.
A lot of a lot of the guy it can be <unk> significant in case of it.
Does it up from there.
Okay. Okay very helpful. I appreciate the time is fine. Thank you very much.
Thanks.
Thank you and we have reached out if I have time for questions I will now turn the call back over to Los Angeles <unk> San go for any additional are closing remarks.
Thank you this complaint results for the court.
Thank you. This does conclude today's program. Thank you for your participation you may disconnect at anytime.
[music].
Mmm.
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