Q1 2024 Navios Maritime Partners LP Earnings Call
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Operator: BF-WATCH TV 2021
Speaker Change: Thank you for joining us for Navios Maritime partners first quarter 2024 earnings conference call with US today from the company are shown women and see them Angelica.
Operator: Thank you for joining us for Navios Maritime Partners' first quarter 2024 earnings conference call. With us today from the company are Chairperson and CEO Miss Angeliki Frangou, Chief Operating Officer Mr. Efstratios Desypris, Chief Financial Officer Mrs. Erifili Tsironi, and Vice Chairman Mr. Ted Petrone.
Speaker Change: Chief Operating officer, Mr. Todd This is Steve priest, Chief Financial Officer, Mr. Gianni and Vice Chairman, Mr. Ted Petrone 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 Gosh M P.
Operator: As a reminder, this conference call is being webcast. To access the webcast, please go to the investor section of Navios Partners' website at www.navios-mlp.com. You will see the webcasting link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there.
Steve Priest: Dot com, you'll see the webcasting link in the middle of a beach and a copy of the presentation referenced in todays earnings conference call will also be found there.
Operator: 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 regarding Navios Partners. Forward-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. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks.
Steve Priest: Now I will review the Safe Harbor statement This conference call.
Steve Priest: Forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 about Navios partners.
Speaker Change: Forward 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.
Angeliki N. Frangou: Such risks are more fully discussed in other partners' filings with the Securities and Exchange Commission.
Angeliki N. Frangou: Information set forth herein should be understood in light of such risks Navios partners does not assume any obligation to update information contained in this conference call. The agenda for todays call is as follows.
Operator: Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows. First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners' segment data. Next, Ms. Tsironi will give an overview of Navios Partners' financial results. Then, Mr. Petrone will provide 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, Ms. Angeliki Frangou. Angeliki?
Angeliki N. Frangou: His friend, who love opening remarks next Mrs. Shippers would give an overview of Navios partners' segment that the next two years.
Angelica: We'll give an overview of another's partners financial results then Mr. <unk> will provide an industry overview and lastly, we'll open the call to take questions now I turned the corner over Tonight as partners chairwoman and CEO essentially coupons Angelica.
Angeliki N. Frangou: Good morning to all of you who join us on today's call. I am pleased with the results for the first quarter of 2024. For the quarter, we reported revenue of $318.6 million and net income of $73.4 million. Earnings per common unit was $2.38. In the first quarter of 2024, regional conflict, particularly in the Middle East, continued to affect transportation. This can be seen in the material reduction in transit through the Red Sea and the Suez Canal.
Angelica: Good morning to all of you will join US on today's call I am pleased with age outs for the first quarter of 'twenty 'twenty four for the quarter, we reported revenue of $318 $6 million and net income of $73 4 million.
Mr. <unk>: It means that companies really need to have stood doughnuts and 38 since the first quarter of 'twenty 'twenty four is your name.
Mr. <unk>: Conflict, particularly the middle East continued to affect transportation.
Mr. <unk>: This can be seen and there might be a reduction in traffic to the red Sea English ways cannot.
Angeliki N. Frangou: In addition, the U.S. and European economies are managing inflationary pressures and are generally healthy, with Europe rebounding after a period of softness. As a result of these and other factors, this was Navios Partners' strongest first quarter financial performance ever. We remain cautious, as many of the factors driving this robust maritime environment can change quickly should conflict-driven inefficiencies clear and all economies suffer from a further wave of inflation. As usual, we continue to execute on our strategic initiatives by focusing on things that we can control, such as reducing leverage and modernizing our energy-efficient fleet.
Casey: In addition database and European economies, and managing inflationary pressures and is generally Casey with Europe rebounding after a period of softness.
Angeliki N. Frangou: As a result of these and other factors. These navios partners strongest first quarter financial performance.
Speaker Change: We remain cautious as many of the factors that I think the whole bus my Diamond vitamins can change quickly should constant driven inefficiencies clear and don't economy suffered through my first of all the way from inflation.
Speaker Change: Usually we continue to execute on our strategic initiatives by focusing on the things that we can control such as reducing leverage and modernizing our energy efficient fleet.
Angeliki N. Frangou: I would also note that we continue to take long-term cover where available, as rates are around or exceeding long-term averages. For example, we recently chartered out a Cape-sized vessel for 2.9 years, almost three years, at a net daily rate of $28,500. Please turn to slide 7.
Speaker Change: I would also note that we've continued to take long term causes when available it oscillates around well exceeding long term averages.
Speaker Change: For example, we recently job there I went to Capesize vessels for 2.9 years, almost three years I've been net daily rate of $28500.
Angeliki N. Frangou: Navios Partners is a leading publicly listed shipping company diversified in 15 asset classes in three sectors. We have $318.4 million of cash in our balance sheet. For sales, here today we sold four vessels, generating $92.6 million in gross sale proceeds, of which $9.8 million of sales were completed in the first quarter of 2024, and $82.8 million of sales will be completed in the second quarter of 2024. For acquisitions, here today, we spent $245.7 million acquiring six vessels.
Speaker Change: Please turn to slide seven Navios partners is a leading publicly listed shipping company diversified into 15 asset classes in three sectors.
Speaker Change: We have three founder and 18.
Angeliki N. Frangou: One $4 million of cash not by us it.
Angeliki N. Frangou: For say here today, we sold four vessels.
Angeliki N. Frangou: 18, $92 6 million gross sale proceeds of which $9 8 million of shares was completed in the first quarter of 'twenty 'twenty four.
Angeliki N. Frangou: $82.8 million of saves will be completed in the second quarter of 'twenty 'twenty four for alcohol. She shows year to date, we spent $245 7 million acquiring six vessels, we acquired doing your buildings Scarborough feed it often amongst.
Angeliki N. Frangou: We acquired two new buildings, scrubber-fitted Aframax LR2 tankers, for $129.1 million. We also acquired four Japanese-built Kamsa Maxis, previously chartered in, for $116.6 million. As for deliveries, we took delivery of three previously announced new building vessels with employment. Two are 5,300 TEU container ships, fixed for an average rate of $37,050 net per day for 5.2 years, and one is an Aframax LR2 tanker fixed at $26,366 net per day for 5 years. We continue to add to our contract backlog. This quarter, we added $211.2 million in contracted revenue.
Speaker Change: And not to digress for 129 $1 million. We also acquired four Japanese be Ghansham oxy previously job bidding for the Honda and $16.6 million.
Speaker Change: As for deliveries, we took delivery of three previously announced new building vessels with employment.
Nava: Do a 5300 <unk> du container ships fixed for the Nava right.
Nava: $37050 net per day for 5.2 here and one is in Oslo, MX and I do think is fixed at 26366 net per day.
Nava: Four five years.
Speaker Change: We continue to add to our contract backlog this quarter, we added $211.2 million in contracted revenue.
Angeliki N. Frangou: Our operating cash flow potential remains strong. For the last nine months of 2024, we estimate to have $53.3 million of contracted revenue in excess of cash costs while having 13,820 open or index days. Turn to slide 8.
Speaker Change: Operating cash flow will remain strong for the last nine months 224, we used in may to have $53.3 million of contracted revenue in makes it Oh gosh close while having said beam thousand exon 20 open or the index data.
Speaker Change: Yeah.
Speaker Change: Turn to slide eight on this slide we provide an overview of our execution in terms of selected metrics, we feel are important.
Angeliki N. Frangou: On this slide, we provide an overview of our execution in terms of selected metrics we feel are important. As you can see, our fleet remains the same size today as it was at year-end 2022, with all of the purchases and sales effectively netting each other out. Not accidentally, our fleet age remains about the same.
Speaker Change: As you can see our fleet remains the same size today as it was in yet in 'twenty to 'twenty two.
Speaker Change: With all of the purchase is in phase.
Speaker Change: This effect is being naked detailed that out.
Speaker Change: Not accidentally our fleet age remains about the same.
Angeliki N. Frangou: We maximize energy efficiency by maintaining a fleet of useful vessels with the latest technology while we patiently await the development of more carbon-neutral technologies. In addition, as you can see from the vessel value, the steel value of our fleet has improved by about 13 percent from the end of 2023, given the recent overall strength of the market. Each segment has performed well, with the container ship segment increasing the most. I would also note that these steel values do not give any consideration to our contract backlog, which is about $3.3 billion.
unknown: We maximize energy efficiency by maintaining a fleet of youthful vessels with the latest technology, while we patiently outweighed the development of more comp one cargo.
Speaker Change: Technologies. In addition, as you've got hit from the vessel the student value of our fleet has improved by about 13% from the end of 2023, given the reason of those thinks of the market. Each segment has performed the way with the containership segment, increasing the most I would also note that.
Speaker Change: Before I used to not give any consideration to our contract backlog, which today is about $3.3 billion with a stable and performing fleet our fleet metrics are strong.
Angeliki N. Frangou: With a stable and performing fleet, our fleet metrics are strong. Since year-end 2022, we have increased our cash balance by 82 percent to $318 million. Our current net leverage is 34 percent, an improvement of 420 basis points over year-end 2023. Therefore, we are on the gliding path to our target net leverage range of 2025 percent. I now turn the presentation over to Mr. Efstratios Desypris, Navios Partners' Chief Operating Officer. Efstratios?
Speaker Change: EBITDA is up 6% over the first quarter of 'twenty 23, and 30% over the first quarter of 'twenty to 'twenty two.
Speaker Change: Since year end 2022 we have increased our cash balance by 82% to $318 million a guy that leverage is 34% an improvement of 420 basis points over he had in 'twenty to 'twenty three.
Speaker Change: Therefore, we are the gliding path to our target net leverage range of 20, 25%.
Efstratios Desypris: And now I'll turn the presentation over to Mr. Stratos, <unk> Navios Partners' Chief operating Officer Stratos.
Stratos: Thank you Jim Good morning, all.
Efstratios Desypris: Thank you, Angeliki, and good morning all. Please turn to slide 9, which details our operating free cash flow potential for the remaining 9 months of 2024. We have fixed 67% of our available days at an average rate of $25,874 net per day. This contracted revenue exceeds our total cash expense by 53.3 million, and we also have 13,820 remaining open or index linked days that could provide potential additional free cash flow. On the right side of the slide, we provide our 42,112 available days by vessel type so you can perform your own sensitivity analysis. However, whatever number is used, we should develop substantial cash flow for the remaining 9 months of 2024. Please tend to slide 10.
Stratos: Please turn to slide nine which details our operating free cash flow potential for the remaining nine months of 2024.
Stratos: We have fixed 67% of our available days at an average rate of 25870 to $74 net per day.
Jim: Contracted revenue exceeds our total cash expense by $53 3 million and we will have 15820 remaining open or index linked days, but.
Speaker Change: Provide potential additional free cash flow.
Speaker Change: On the right side of the slide we provide out of 42112 available days by vessel type. So you can perform your own sensitivity analysis.
Speaker Change: However, whatever number we should develop substantial cash flow for the remaining nine months consequent for.
Speaker Change: Please turn to slide 10.
Efstratios Desypris: We are always renewing the fleet so that we maintain a young profile. It is part of our strategy to reduce our carbon footprint by modernizing our fleet, benefiting from newer technologies and eco-vessels with greener characteristics. During 2024, we get delivery of three vessels, two 5,300 TU container ships, both chartered out for an average of 5.2 years at an average net daily rate of $37,050 net per day, and one LR2 Aframax vessel, which has been chartered out for 5 years at $26,366 net per day.
Speaker Change: We are always reviewing the flip so long we maintain exemplifies.
Speaker Change: It is part of our strategy to reduce our carbon footprint by modernizing our fleet benefiting from new technologies and their commissions with getting their characteristics.
Speaker Change: During 2024, we can deliver to a free missions to 5300 Teu container ships booked something all toward an average of 5.2 years at an average daily rate of <unk> $57050 per day.
Speaker Change: And one last glaucoma Commission, which has been chartered out for five of $26366 net per day.
Efstratios Desypris: The contracted revenue of three vessels delivered amounts to approximately 190 million. Following these deliveries, we have 1.6 billion remaining investment in 26 new building vessels delivering to our fleet through 2027. In container ships, we have 9 vessels to be delivered with a total acquisition price of approximately 672 million. We have mitigated this risk with long-term credit-worthy charters generating about 0.9 billion in revenue over a 6.8 year average charter duration.
Speaker Change: The contracted revenue, 3% believe it amongst approximately $190 million.
Speaker Change: Following these deliveries we have $1 6 billion remaining investment in 26, new buildings delivering blood fleet through 2027.
Speaker Change: And container ships, we have nine vessels to be delivered with a total acquisition price of approximately 672 million.
Speaker Change: We have mitigated this risk with long term could it be dwarf accomplish generating about 0.9 billion in revenue over the $6 eight zero average charter duration.
Speaker Change: In the tanker space, we acquired 17 vessels for a total price of approximately $950 million.
Efstratios Desypris: In the tanker space, we acquired 17 vessels for a total price of approximately 950 million. We chartered 11 of these vessels for an average period of 5 years, generating revenues of about half a billion. We have also been opportunistically replacing older vessels. In 2024, we sold four vessels with an average age of 17.7 years for 92.6 million. At the same time, we exercised the purchase option on 4 chapters in Japanese-built Kamsar Maxis with an average age of 7.6 years for a total price of 116.6 million.
Speaker Change: We talked to about 11 of these vessels for an average period of five years generating revenues of about half a billion.
Speaker Change: We have also been opportunistically, replacing older emissions.
Speaker Change: <unk> 24, we have sold four vessels with an average age of 17.7, yes for $96 million.
Speaker Change: Same time, we exercise the purchase option. Unfortunately didn't punish bill comes into boxes.
Speaker Change: With an average age of seven six years, what does it take basically how much of a $16 6 million.
Speaker Change: Moving to slide 11, we continue to see good long term employment for our fleet.
Efstratios Desypris: Moving to slide 11, we continue to secure long-term employment for our fleet. In 2024, we will have created about 210 million additional contracted revenues. Approximately 130 million comes from our tanker, about 41.5 million from three container ships, and 40 million comes from our dry balance. Our total contracted revenue amounts to 3.3 billion. 1.2 billion relates to our tanker fleet, 0.4 billion relates to our dry bulk fleet, and 1.7 billion relates to our container fleet.
Speaker Change: In 2024, we have created about 210 million additional contracted revenue.
Speaker Change: Approximately 150 million comfortable motor tanker fleet about $41 5 million from three container ships and 40 million comes from our Drybulk fleet.
Speaker Change: Our total contracted revenue amounts to $3 3 billion.
Speaker Change: 1.2 billion relates to untangle slipped four 4 billion related to our dry bulk fleet and $1 7 billion relational container ships.
Efstratios Desypris: Charters are extending through 2037 with a diverse group of quality counterparts. About 50% of our contracted revenue is expected to be earned in the next two and a half years. I now pass the call to Eri Tsironi, our CFO, who will take you through the financial highlights.
Scientists: Scientists are extending through 2057 with a diverse group of quality counterparties.
Speaker Change: About 50% of our contracted revenue.
Speaker Change: Expected to be in the next two and half yes.
Speaker Change: I now pass the call to ADT Roni Al <unk>, who will take you through the financial highlights Eddie. Thank you Stratos had good morning Ali.
Erifili Tsironi: Thank you, Efstratios, and good morning all. I will briefly review our unaudited financial results for the first quarter of 2024. The financial information is included in the press release and summarized in the slide presentation available on the company's website. Moving to the earnings highlights in slide 12, total revenue for the first quarter of 2024 increased by 3% to $319 million compared to $310 million for the same period in 2023. Available dates decreased by 3% to 13,540 compared to 13,900 for the same quarter last year.
Speaker Change: We'll briefly review our unaudited financial results for the first quarter of 2020 for the financial information is included in the press release and summarized in the slide presentation are available on the company's website.
Ali: Moving to the earnings highlights on Slide 12 total revenue for the first quarter of 'twenty 'twenty four increased by 3% to $319 million compared to 310 million for the same period in 2023.
Speaker Change: Available days decreased by 3% with 13540 compared to 13900, a day for the same quarter last year.
Erifili Tsironi: Our combined fleet time charter equivalent rate increased by 3% to 21,514 per day compared to 20,811 per day for the same period last year. In terms of sector performance, our TCE rate for our dry bulk vessels improved by 29% to 14,209 per day compared to 10,998 per day for the same period last year. The time charter equivalent rate for our tankers was 28,087 per day, which is in line with Q1 2023 levels, whereas our container TCE rate decreased by 15% to 29,838 per day.
Speaker Change: Combined fleet time charter equivalent rate increased by 3% and 21514 per day compared to 20811 per day for the same period in 2023.
Speaker Change: In terms of sector performer, our TCE rate for dry bulk vessels improved by 29% to 14000.
Speaker Change: 290 per day compared to 10998 per day for the same period last year.
Speaker Change: Charter equivalent rate for our tankers was 28008 eight.
Speaker Change: <unk> thousand 87 per day, which is in line with Q1 2023 levels, whereas a container PCE rate decreased by 15% or 29838 per day.
Erifili Tsironi: EBITDA for Q1 2024 and Q1 2023 was positively affected by gains from vessel sales equal to $2,033,000, respectively. Adjusted EBITDA for Q1 2024 increased by $9,000,000 to $164,000,000. Adjusted net income for Q1 2024 increased by 8% to $71,000,000 compared to $66,000,000 in Q1 2023. Adjusted earnings per common unit for Q1 2024 were $2.32.
Speaker Change: EBITDA for Q1, 'twenty 'twenty, four and Q1 2023 first positively affected from games from vessel sales equal to $2 million and $33 million, respectively. Adjusted EBITDA for Q1, 'twenty 'twenty four increased by 9 million to $164 million.
Speaker Change: Adjusted net income for Q1, 'twenty 'twenty four it increased by 8% to $71 million compared to 66 million in Q1 'twenty two 'twenty three adjusted earnings per common unit for Q1 24 to $32 turning to slide 13, I will briefly discuss some key balance.
Erifili Tsironi: Turning to slide 13, I will briefly discuss some key balance sheet data. As of March 31st, 2024, cash and cash equivalents, including restricted cash and time deposits in excess of three months, were $318 million. During the first quarter of 2024, we paid 55 million net of related debt of pre-delivery installments under our new building program, vessel acquisitions, and other capitalized expenses. We sold one vessel for 10 million net, adding about 5 million cash after the repayment of its respective debt. Long-term borrowings, including the current portion net of deferred fees, were 1.9 billion, which is in line with Q4 2023 levels. However, net debt to book capitalization decreased to 33.6 percent.
Speaker Change: As of March 31st 2024.
Speaker Change: Cash and cash equivalents, including restricted cash and time deposits in excess of three months or $318 million.
Speaker Change: During the first quarter of 'twenty 'twenty four we paid 55 million net of related debt of pre delivery installments under our new building program vessel acquisitions and other capitalized expenses. We saw in one basin for 10 million net adding about 5 million costs. After the repayment of the irrespective.
Speaker Change: It.
Speaker Change: Long term borrowings, including the current portion net of deferred fees were $1 9 million, which is in line with Q4 'twenty to 'twenty three levels net debt to book capitalization decreased to 33, 6%.
Erifili Tsironi: Slide 14 highlights our debt profile. We continue to diversify our funding resources between bank debt and leasing structures, while 36% of our debt has a fixed interest at an average rate of 5.6%. We also tried to mitigate part of the increased interest rate costs by having reduced the average margin for our floating debt by approximately 40 basis points to 2.3% from 2.7% at 2022 year-end. Furthermore, our strong cash balances contributed 3.4 million of interest income. Our maturity profile is staggered, with no significant values due in any single year.
Speaker Change: Slide 14 highlights our debt profile.
Speaker Change: We continue to diversify our funding sources between bank debt and leasing structures, while 36% of our debt has fixed interest at an average rate of five 6%.
Speaker Change: We also try to mitigate part of the increased interest rate costs haven't used the average margin for our floating debt by approximately 40 basis points to two 3% from two 7% up 2022 year end.
Speaker Change: Furthermore, our strong cash balances contributed $3 4 million of interest income.
Speaker Change: And maturity profile this target with no significant values you in any single year.
Erifili Tsironi: In terms of our new building program, approximately 75% of our new building financing is already concluded or in the documentation phase at an average margin of 1.8% for floating rate debt. Turning to slide 15, you can see our ESG initiatives. We continue to invest in new energy-efficient vessels and reduce emissions through energy-saving devices and efficient vessel operations. In February 2024, Navios, in collaboration with Lodge Register, founded the Global Maritime Emission Reduction Center that will focus on optimizing the existing global fleet efficiency.
Speaker Change: In terms of our new building program approximately 75% of our new building financing is already concluded are in documentation phase at an average margin of one 8% for floating rate debt.
Speaker Change: Turning to slide 15, you can see our ESG initiatives, we continue to invest in new energy efficient vessel and infusion emissions through energy saving devices and efficient vessel operations.
Speaker Change: In February of 'twenty 'twenty four Navios and collaborations are also registered found that the global Maritime emission reduction center that will focus on optimizing the existing global fleet efficiency.
Erifili Tsironi: Navios is a socially conscious group whose core values include diversity, inclusion, and safety. We have strong corporate governance and a clear code of ethics, while our board is composed of majority independent directors. I now pass the call to Ted Petrone to take you through the industry section. Ted? Thank you.
Nobody else: Nobody else is a socially conscious gnome puts quanta visors include diversity inclusion and safety we.
Nobody else: We have strong corporate governance and clear code of ethics, while our board is composed by majority independent directors I now pass the call to Ted Petrone to take you through the industry section.
Ted C. Petrone: Thank you, Ari. Please turn to slide 17 for a review of the current trade disruptions. The Red Sea entrance leading to the Suez Canal, a strategic maritime transit point, continues to operate at restricted transit levels. Red Sea disruptions have caused a rerouting of ships via the Cape of Good Hope, increasing cost and ton miles. Since the first half of December, transits have reduced by 59% for containers, 40% for tankers, and 55% for dry bulk vessels.
Ted C. Petrone: Thank you Arie, Please turn to slide 17 for a review of the current trade disruptions the Ritchie agents, leading to the Suez Canal or strategic Maritime Transit point continues to operate at restricted transit levels.
Ted C. Petrone: Betsy disruptions have caused the rerouting of ships via the Cape of good hope increasing cost in ton miles since.
Betsy: Since the first half of December trends have reduced by 59% for containers, 40% for tankers and 55% for dry bulk vessels, Panama Canal Daily Transit restriction stand at about 33% below normal with additional trends as anticipated by month end.
Ted C. Petrone: Panama Canal daily transit restrictions stand at about 33% below normal, with additional transits anticipated by month end. Please turn to slide 19 for a review of the tanker industry. World GDP grew at 3.2% in 2023, with a similar growth expectation in 2024, based on the IMF's April forecast.
Betsy: Please turn to slide 19 for a review of the tanker industry.
Betsy: Real GDP grew at three 2% and 23 similar growth expectation in 'twenty four based on the Imf's April forecast despite of economic uncertainties in the crisis and the Ukrainian Rich C. D E. I E. A projects of $1 2 million barrel per day increase in world oil demand for 2020 for Chinese.
Ted C. Petrone: In spite of economic uncertainties and the crisis in the Ukraine and the Red Sea, the IEA projects a 1.2 million barrels per day increase in world oil demand for 2024. Chinese crude imports continued at healthy levels, averaging 11 million barrels per day in Q1. After a seasonally strong Q4 in 2023, rates remained firm on the back of rising demand and increasing refinery throughput. The OPEC plus crude export cuts have been mitigated by increased Atlantic to Far East exports and increased ton miles.
Betsy: Chinese crude imports continued at healthy levels, averaging at 11 million barrels per day in Q1.
Betsy: After a seasonally strong Q4 in 2023 rates remain firm on the back of rising demand and increasing refinery throughput.
Betsy: OPEC plus crude export cuts have been mitigated by increased Atlantic to far east exports increasing ton miles. Additionally.
Ted C. Petrone: Additionally, seaborne crude and clean trading patterns, which were initially diverted to longer haul routes due to the Russian sanctions, have once again been rerouted by the above-mentioned Red Sea disruptions. These even longer route hauls continue to increase ton miles, putting upward pressure on both costs and rates.
Betsy: Additionally, seaborne crude and clean trading patterns, which were initially diverted to longer haul routes due to the Russian sanctions have once again been rerouted by the above mentioned Red Sea disruptions. These even longer route holes continue to increase ton miles putting upward pressure on both cost and rates turning to slide 20 as previous.
Ted C. Petrone: Turning to slide 20, as previously mentioned, both crude and product rates remain strong across the board due to healthy supply and demand fundamentals and shifting trading patterns. Product tankers are also aided by healthy refinery margins and discounted Russian crude exported to the Far East, frequently returning to the Atlantic as clean product. Crew ton miles are expected to grow at 3.2% in 2024 and a further 3.6% in 2025. Similarly, product tanker ton miles are expected to grow 7% in 2024 and additionally 0.4% in 2025. These percentage increases anticipate some continued canal restrictions.
Ted C. Petrone: As we mentioned both crude and product rates remained strong across the board due to healthy supply and demand fundamentals and shifting trading patterns.
Betsy: Today tankers are also aided by healthy refinery margins and discounted Russian crude exports to the far east frequently returning to the Atlantic as clean product.
Betsy: Who ton miles are expected to grow at three 2% in 2024 and a further three 6% in 2025, similarly product tanker ton miles are expected to grow 7% in 'twenty four and additionally, 0.4% in 2025. These percentages increases anticipate some continued canal restrictions.
Ted C. Petrone: Turning to slide 21, BLCC net fleet growth is projected to be negative for both 2024 and 2025 at 0.8% negative and 1.8% negative, respectively. This decline can be partially attributed to owners' hesitance to order expensive long-lived assets in light of macroeconomic uncertainty and engine technology concerns due to CO2 restrictions enforced since the beginning of this year. The current low order book is only 5.6% of the fleet, or only 50 vessels, one of the lowest in 30 years.
Ted C. Petrone: Turning to slide 21, VLCC net fleet growth is projected to be negative for both 24, and 25, 0.8% negative and 1.8% negative respectively.
Speaker Change: This decline can be partially attributed to owners hesitant to order expensive long lived assets in light of macroeconomic uncertainty and engine technology concerns due to C. O two restrictions enforced since the beginning of this year.
Ted C. Petrone: The current low order book is only five 6% of the fleet or only 50 vessels one of the lowest in 30 years vessels over 20 years of age are about 17% of the total fleet were 156 vessels, which is about three times the order book.
Ted C. Petrone: Vessels over 20 years of age are about 17% of the total fleet, or 156 vessels, which is about three times the order book. Turning to slide 22, projected product tanker net fleet growth is 1.5 percent for 2024 and 4.7 percent for 2025. The current product tanker order book is 14.3 percent of the fleet and is approximately equal to the 14.5 percent of the fleet, which is 20 years of age or older.
Speaker Change: Turning to slide 22 projected product tanker net fleet growth is one 5% for 2024 and four 7% for 2025.
Speaker Change: The current product tanker order book is 14, 3% of the fleet is approximately equal to the 14, 5% of the fleet, which is 20 years of age or older.
Speaker Change: And concluded the tanker sector review the tanker sector across tanker rates across the board continue at historically healthy levels. The combination of below average global inventories gross oil demand a new longer trading routes for both crude and products as well as one of the lowest order books in three decades, and the IMO 2020 to irregular.
Ted C. Petrone: In conclusion, tanker rates across the board continue at historically healthy levels. The combination of below-average global inventories, growth in oil demand, and new longer trading routes for both crude and products, as well as one of the lowest order books in three decades and the IMO 2022 regulations should provide for healthy tanker earnings going forward. Please turn to slide 24 for a review of the dry bulk industry. Strong Atlantic exports of coal, iron ore, and grain continued in the new year, with the BDI averaging 1824 for Q1, an 80% increase over Q1 of 2023. This counter-cyclical strength, led by the capes, lifted the cape average earnings to R24 286, the highest Q1 average since 2010.
Ted C. Petrone: Patients should provide for healthy tanker earnings going forward.
Ted C. Petrone: Please turn to slide 24 for a review of the Drybulk industry.
Ted C. Petrone: Strong Atlantic exports of coal iron ore and grain continued in the new year with the BVI, averaging $18 24 for Q1 and 80% increase over Q1 of 2023. This counter cyclical strength led by the Capes lifted the Cape average earnings to 24286, the highest Q1 average since 2010.
Ted C. Petrone: Drybulk trade is expected to grow by one 6% this year enhanced by a two 4% increase in ton miles with most of the growth anticipated to come from additional Atlantic exports of the above mentioned cargos plus bauxite, the vast majority destined to China and southeast Asia.
Ted C. Petrone: Dry milk trade is expected to grow by 1.6 percent this year, enhanced by a 2.4 percent increase in ton miles, with most of the growth anticipated to come from additional Atlantic exports of the above-mentioned cargoes, plus bauxite, the vast majority destined for China and Southeast Asia. Going forward, supply and demand fundamentals remain intact, long-duration trades, the historically low order book, continuing canal restrictions, and tightening DHG emissions regulations remain positive factors, which are reflected in the S&P period and FFA markets.
Ted C. Petrone: Going forward supply and demand fundamentals remain intact longer duration trades. The historically low order book, continuing canal restrictions and tightening G. H G emissions regulations remain positive factors, which are reflected in the S&P period and FFA markets.
Ted C. Petrone: Turning to slide 25, the current order book stands at 9.3% in the fleet, one of the lowest since the late 1990s. Net fleet growth for 2024 is expected to be only 2.9% and 2.4% in 2025, as owners remove tonnage that will be uneconomic due to the IMO 2023 CO2 rules enforced since the beginning of the year. Vessels over 20 years of age are about 9.9% of the total fleet, which compares favorably with the low order book.
Ted C. Petrone: Turning to slide 25, the current order book stands at nine 3% of the fleet what are the lowest since the late 19 nineties net fleet growth for 'twenty 'twenty four is expected to be only two 9% and two 4% in 2000 and twenty-five as owners removed tonnage that will be uneconomic due to the IMO 2023 C. O two rules enforced since the beginning of the.
Ted C. Petrone: Here.
Ted C. Petrone: Vessels over 20 years of age are about nine 9% of the total fleet, which compares favorably with the low order book.
Ted C. Petrone: In concluding our Dry Bulk Sector Review, continuing demand for natural resources, restrictions in transiting both the Panama and Suez Canals, war and sanction-related longer haul trades, combined with a slowing pace of new building deliveries, all support freight rates going forward. Please turn to slide 27 for a review of the container industry. Unexpected strength in the trade flow, coupled with continued rerouting of vessels away from the Red Sea and around the Cape of Good Hope, increased ton miles, pushing the SCFI back up to 2,306 last week, the highest level outside the pandemic era. Upward pressure on time charter rates should remain for the duration of the Red Sea disruption.
Ted C. Petrone: In concluding our Drybulk sector review, continuing demand for natural resources restrictions and transient both to Panama, and Suez Canal War and sanction related longer haul trades combined with slowing pace of new building deliveries all support freight rates going forward.
Ted C. Petrone: Please turn to slide 27 for a review of the container industry.
Ted C. Petrone: Unexpected strength in the trade flow coupled with continued rerouting of vessels away from the Red Sea in and around the Cape of good hope increased ton miles pushing the C. F. I back up to 2003 hundred 306 last week, the highest level outside the pandemic era upper.
Ted C. Petrone: Upward pressure for time charter rates should remain for the duration of the read through disruption. However, continuing record fleet growth should eventually modify these gains in reverse course in the middle East conflicts settles.
Ted C. Petrone: However, continuing record fleet growth should eventually modify these gains and reverse course when the Middle East conflict settles. Although the trade is expected to grow by 4.1% in 2024 and 3% in 2025, new building deliveries in 2024 and 2025 will be equivalent to approximately 17% of the fleet, after record net fleet growth of 9% this year, followed by 4.9% in 2025. This should continue to put pressure on rates for some time.
Ted C. Petrone: Although the trade is expected to grow by four 1% in 2024 and 3% in 2025, new building deliveries in 'twenty 'twenty, four and 'twenty five will be equivalent to approximately 17% of the fleet. After record net fleet growth of 9%. This year, followed by four 9% in 2025.
Ted C. Petrone: This should continue to put pressure on rates for some time.
Ted C. Petrone: Turning aside 28, net fleet growth is expected to be 9% for 2024 and a further 4.9% for 2025. The current order book stands at 20.7% against 11.9% of the fleet 20 years of age or older. About 73% of the order book is for 10,000 TEU vessels or larger. In concluding the container sector review, longer-term supply and demand fundamentals remain challenged due to economic and geopolitical uncertainties and an elevated order book. However, trade growth improvements, increasing ton miles, and world GDP growth of 3.2% for 2024 provide a counterpoint to a challenging 2024.
Ted C. Petrone: Turning to slide 28, net fleet growth is expected to be 9% for 2024 and a further four 9% for 2025. The current order book stands at 27% against 11.9% of the fleet 20 years of age or older about 73% of the order book is 410000 Teu vessels.
Ted C. Petrone: Roger.
Ted C. Petrone: In concluding the container sector review.
Ted C. Petrone: Term supply and demand fundamentals remain challenged due to economic and geopolitical uncertainties and an elevated order book, However, trade growth improvements increasing ton miles in world GDP growth of three 2% for 2024 provide a counterpoint to a challenging 2024.
Angeliki N. Frangou: This concludes our presentation. I would now like to turn the call over to Angeliki for a final comment. Okay, Angeliki?
Ted C. Petrone: This concludes our presentation I would now like to turn the call over to Angela Lucky for a final comment Angie leaky.
Angeliki: This completes our formal presentation, we open the call to questions.
Angeliki N. Frangou: This completes our formal presentation. We will open the call to questions.
Operator: Thank you. At this time, if you would like to ask a question, please press Star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing Star 2. Once again, that is Star 1 to ask a question and Star 2 to remove yourself. We will pause for just a moment to assemble the question queue. We'll go now to Omar Nokta with Jeffreys. Please go ahead.
Angeliki: Thank you at this time, if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star kill.
Omar Mostafa Nokta: Once again that is star one to ask a question and start to move yourself well pause for just a moment to assemble the question queue.
Omar Mostafa Nokta: Well go now to Omar <unk> with Jefferies. Please go ahead.
Omar Mostafa Nokta: Thank you. Hey guys, good morning, good afternoon.
Omar Mostafa Nokta: Thank you Hey, guys. Good morning, good afternoon, thanks for the update.
Omar Mostafa Nokta: Thanks for the update. Sounds like and looks like things are going quite nicely for Navios with all three pillars of your business going well. You've got tankers, drywall, containers; they all seem to be in decent shape. Does that change anything in terms of deploying capital or monetizing assets for you, or is it more of the same where we can just expect you to continue to fine-tune the fleet?
Omar Mostafa Nokta: It sounds like it looks like things are going quite nicely for for Navios with all three pillars of your business going well tankers drybulk containers, they all seem to be in decent shape.
Omar Mostafa Nokta: That change anything in terms of deploying capital or monetizing assets.
Omar Mostafa Nokta: For you or is it more of the.
Omar Mostafa Nokta: Where we can just expect you to continue to fine tune the fleet.
Angeliki N. Frangou: Yes, we like boring things. Good morning.
Omar Mostafa Nokta: Yes, we like buying things with morning, or basically I mean.
Angeliki N. Frangou: Basically, I mean, we are four months into the year, and we are about 67-70% fixed. And we can see that basically, as we can also see from slide 7, we have 53 million revenues above cash, above our cash expenses. So that gives us a comfortable position. It gives us visibility, and we can see that this year will develop as or better than 2023. So this gives us the ability to further implement our strategies. You know, you have seen our cash building up, even though we have a lot of new building payments and our leverage going down. Basically, on the other side, you have to mitigate the market risk. That's the big thing. And we are constantly doing that, as you can see.
Angeliki N. Frangou: We are four months into the here, we are about $67 70 per head fake and we got it.
Angeliki N. Frangou: That basically.
Speaker Change: Slide seven we have $53 million.
Angeliki N. Frangou: Yeah.
Angeliki N. Frangou: Revenues at all.
Angeliki N. Frangou: Apple.
Speaker Change: At gas expenses, so that gives us a comfortable position.
Angeliki N. Frangou: It gives us visibility and we can see that these yet.
Angeliki N. Frangou:
Angeliki N. Frangou: Our bad debt.
Angeliki N. Frangou: So.
Speaker Change: To further implement our strategy.
Angeliki N. Frangou: You know you have seen that.
Speaker Change: Leading up even though we are.
Speaker Change: A lot of new building payments.
Angeliki N. Frangou: Payments.
Angeliki N. Frangou: Yeah.
Angeliki N. Frangou: And.
Angeliki N. Frangou: It's growing.
Speaker Change: Down basically on the other side, we will have to mitigate the market.
Angeliki N. Frangou: And we are doing that.
Angeliki N. Frangou: Carsten.
Angeliki N. Frangou: Yeah.
Angeliki N. Frangou: Yeah.
Angeliki N. Frangou: Thanks, Nigel Lakey there thanks.
Angeliki N. Frangou: Thanks, Angeliki. Is there any kind of, just in terms of what we're seeing in the market today, it seems like there's plenty of opportunity. You've obviously been very active. Is there a segment or asset class that you would say stands out as compelling above the rest at this point, whether it's for new investment or potentially divestment?
Angeliki N. Frangou: Thanks for that is there any kind of.
Angeliki N. Frangou: Just in terms of what we're seeing in the market today. It seems like there's plenty of opportunity you've obviously been very active.
Angeliki N. Frangou: Active is there a segment or asset class that you would say stands out as compelling above the rest at this point, whether it's for new investments or potentially divesting it.
Angeliki N. Frangou: Listen, we are opportunistic on this when we see values that make sense on all the vessels we will sell. I mean, we have relationships, and deals on new buildings are a little bit more difficult because values have moved up, so you need to make sure that the transaction that you are – the new building that you are actually ordering, which is basically a liability unless you are actually able to fix it at an attractive return and a good residual value risk.
Angeliki N. Frangou: We are opportunistic on this when we see it.
Angeliki N. Frangou: That makes sense.
Angeliki N. Frangou: On the older vessels.
Speaker Change: I mean, we have relationships and build a new building a bit more difficult.
Angeliki N. Frangou: Values have moved up.
Angeliki N. Frangou: And make sure that that exaction that yet.
Angeliki N. Frangou: The new building.
Speaker Change: Actually all day, which is basically a liability unless you actually.
Speaker Change: I'm going to fix it at an attractive return.
Angeliki N. Frangou: Good residual evaluate this is constant.
Angeliki N. Frangou: This is the thing that we are constantly monitoring. With the values of new buildings going up, it's more difficult to actually execute on that strategy because you need to see rates going up, or you have to have certain relationships. On the sport vessels, it's about, you know, we see transactions, but, you know, it's all the good long-term charters we saw even dry, picking up, doing longer durations at attractive rates. But all this is also influenced by the Red Sea, which can disappear at any moment, and that would be a good thing, and that would fundamentally change the rate environment we are living in.
Angeliki N. Frangou: The one thing we.
Speaker Change: The violence of human things going up it's more difficult to actually execute on that strategy, because we need to see rates going up or you have to have.
Angeliki N. Frangou: On the spot vessels is about you know.
Angeliki N. Frangou: Hey transaction.
Angeliki N. Frangou: As you know is all.
Angeliki N. Frangou: Good.
Angeliki N. Frangou: The long term.
Angeliki N. Frangou: Picking up.
Angeliki N. Frangou: And then longer durations at attractive rate, but is all of this also is influenced by the let's see.
Angeliki N. Frangou: Let's not.
Speaker Change: Forget that.
Angeliki N. Frangou: And as he comes up at any moment.
Angeliki N. Frangou: And that will be a good team and that's been fundamental.
Angeliki N. Frangou: Yeah. They are.
Speaker Change: Violent we're living.
Angeliki N. Frangou: Alright, there are no definitely a good point.
Omar Mostafa Nokta: Right. Yeah, no, definitely. Good point. And maybe just one final one for me.
Angeliki N. Frangou: And maybe just one final one for me.
Omar Mostafa Nokta: You've had the stated goal now for some time of trying to get a.
Omar Mostafa Nokta: You've had the stated goal for some time now of trying to get leverage down to that 20 to 25 percent level. I guess one question is whether it seems perhaps that that's achievable over the next maybe 12 to 18 months. So the question would be, is that something you also see as a realistic time period to get leveraged that low? And then also, have you thought about what happens to Navios once you achieve that goal? Does anything change strategically going forward?
Omar Mostafa Nokta: Leverage down to about 20% to 25% level I.
Angeliki N. Frangou: Thank you.
Omar Mostafa Nokta: I guess one question is you know it.
Angeliki N. Frangou: It seems perhaps it thats achievable over the next maybe 12 to 18 months. The question would be does that something you also see.
Angeliki N. Frangou: As a realistic time period to get leveraged that low and then also what have you thought about what happens.
Speaker Change: Now this once you achieve that goal or has anything changed strategically.
Angeliki N. Frangou: Going forward.
Angeliki N. Frangou: Okay.
Speaker Change: They're going to Italy.
Angeliki N. Frangou: The goal to reach it is, it may be about a year from today, as we get the vessels into the water, because you de-leverage. Let's not forget that, basically, on the leverage ratio, we do not count, you know, the backlog that we have. We have about 3.3 billion of contracted revenue that creates a good buffer, good visibility for the next years. And as you saw this year, we are already getting our new buildings into the water, which as we get them, we de-leverage automatically.
Speaker Change: It may be about a year from today as we get the vessels into the into the mine.
Speaker Change: Got it.
Angeliki N. Frangou: Let's not forget that.
Angeliki N. Frangou: Basically on the leverage ratio.
Angeliki N. Frangou: We do not count that.
Angeliki N. Frangou: Backlog that we have would have about $3 3 billion.
Angeliki N. Frangou: Of contracted revenue.
Angeliki N. Frangou: Right.
Group: Group's backfill a good visibility for the survey.
Speaker Change: And as you saw this year, we are already getting out of your buildings into there as.
Angeliki N. Frangou: As we get them, we delever dramatically. So this is a process that you will be watching a lot on the remaining of that again in the beginning of the neck.
Angeliki N. Frangou: So this is a process that you will be watching a lot over the remaining of the year and the beginning of the next. And, you know, this is a goal, it's an end result. You are gliding in that direction, and we are also building the cast.
Speaker Change: Uh huh.
Angeliki N. Frangou: And you know this is gone.
Speaker Change: And as that gliding to that direction and we are also building that guy.
Angeliki N. Frangou: Got it okay. Thank you guys really appreciate it I'll turn it over.
Omar Mostafa Nokta: Got it. Well, thank you, Angeliki. I appreciate it. I'll turn it over.
Speaker Change: And we have no additional questions standing by at this time I would like to turn the floor back over to Angela Leaky, Frank <unk> for any additional or closing comments.
Operator: And we have no additional questions standing by at this time. I'd like to turn the floor back over to Angeliki Frangou for any additional closing comments. Thank you.
Angeliki N. Frangou: Thank you. This concludes our first quarter results. Thank you.
Angeliki N. Frangou: Thank you. This completes our first quarter results.
Speaker Change: Once again, ladies and gentlemen that will conclude today's call. Thank you for your participation you may disconnect at this time.
Operator: Thank you. Once again, ladies and gentlemen, that will conclude today's call. Thank you for your participation. You may disconnect at this time. Thank you for watching!
Operator: Once again, ladies and
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