Navios Maritime Holdings Inc. Reports Second Quarter Net Income of $45 Million, After Sale of Dry Bulk Fleet
Navios Maritime Holdings Inc., a global seaborne shipping and logistics company, reported financial results for the second quarter and six months ended June 30, 2022.
Angeliki Frangou, Chairwoman and Chief Executive Officer, stated, “I am pleased with the results for the second quarter of 2022. In the second quarter of 2022, Navios Holdings reported revenue of $159.2 million, EBITDA of $98.9 million and net Income of $45.0 million.”
Angeliki Frangou, continued, “We completed the $835.0 million sale of our dry fleet and used the proceeds to pay down $784.2 million of debt. Going forward, we will refocus on our controlling interest in Navios South American Logistics, a logistics and infrastructure provider in South America. Navios Logistics owns, among other assets, the only dedicated iron ore port and the largest independent grain port in the Hidrovia region. The transshipment facilities are located at the mouth of the river, where water levels are unaffected by the droughts, within a tax-free zone in Uruguay.”
HIGHLIGHTS
Recent Developments
In July 2022 Navios Holdings agreed to sell its 36-vessel drybulk fleet for aggregate consideration of $835.0 million consisting of cash and the assumption of bank debt and finance leases related to the vessels, and subject to a working capital adjustment at closing (the “Transaction”), to Navios Maritime Partners L.P. (“Navios Partners”) (NYSE: NMM). The Transaction closed in two tranches. The first tranche, involving the sale of 15 vessels, was completed on July 29, 2022. The second tranche, involving the sale of the remaining 21 vessels, was completed on September 8, 2022.
The aggregate Transaction consideration reduced Navios Holdings’ liabilities by approximately $784.2 million, consisting of:
(1) Assumed by Navios Partners, includes bank debt and finance lease liabilities as well as obligations from bareboat arrangements on a finance lease basis as of June 30, 2022, as adjusted at the closing of the Transaction.
(2) Mandatory repayment of loans due to N Shipmanagement Acquisition Corp. and its subsidiaries, an entity affiliated with the Chairwoman and Chief Executive Officer of Navios Holdings.
The Transaction was negotiated and unanimously approved by a Special Committee of Navios Holdings. The Transaction was also unanimously approved by the board of directors of Navios Holdings. Latham & Watkins LLP acted as legal advisor and Arctic Securities AS acted as sole financial advisor to the Special Committee.
NM Post Sale
Following the closing of the Transaction, Navios Holdings exited direct fleet ownership and the business previously represented by the Dry Bulk Vessel Operations segment. Going forward, the Company plans to focus on growing the Navios South American Logistics Inc. (“Navios Logistics”) business. Navios Holdings owns a 63.8% controlling equity stake in Navios Logistics, and the results of operations of Navios Logistics are consolidated into Navios Holdings’ financial statements. Navios Logistics is a leading infrastructure and logistics company in the Hidrovia region of South America.
Navios Holdings also continues to hold a 10.3% interest in Navios Partners accounted for as an equity investment.
Non-GAAP Measures
EBITDA, is a non-U.S. GAAP financial measures and should not be used in isolation or as substitution for Navios Holdings’ or Navios Logistics’ results calculated in accordance with U.S. GAAP.
See Exhibit I under the heading, “Disclosure of Non-GAAP Financial Measures,” for a discussion of EBITDA and EBITDA of Navios Logistics (on a stand-alone basis) and a reconciliation of such measures to the most comparable measures calculated under U.S. GAAP.
Earnings Highlights
Second Quarter 2022 and 2021 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):
The second quarter 2022 and 2021 information presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.
(1) Net Income attributable to Navios Holdings’ common stockholders, EBITDA and Basic Earnings attributable to Navios Holdings’ common stockholders for the three month period ended June 30, 2021 include $5.4 million in impairment losses relating to the sale of drybulk vessels.
Revenue from the Dry Bulk Vessel Operations for the three month period ended June 30, 2022 increased by $4.0 million, or 4.6%, to $90.0 million, as compared to $86.1 million for the same period during 2021. The increase in dry bulk revenue was mainly attributable to the increase in the time charter and freight market during the three month period ended June 30, 2022. The TCE per day increased by 25.1% to $26,984 per day in the three month period ended June 30, 2022, as compared to $21,572 per day in the same period of 2021. This overall increase was partially mitigated by 641 fewer available days as compared to 2021, mainly due to (i) a decrease in charter-in vessels’ available days by 350 days due to the redelivery to owners of four charter-in vessels in 2021 and the acquisition of one charter-in vessel in 2021, which was then sold to a related party; and (ii) a decrease in available days of owned and bareboat-in vessels by 291 days following the sale of four of the Company’s vessels in 2021.
Revenue from the Logistics Business was $69.2 million for the three month period ended June 30, 2022, as compared to $57.6 million for the same period in 2021. The increase was mainly attributable to (i) a $6.6 million increase in revenue from the port terminal business mainly due to higher volumes transshipped in the grain port terminal due to increased Uruguayan soybean production and exports and higher tariffs at the iron ore terminal; (ii) a $4.7 million increase in revenue from the cabotage business mainly due to more operating days; and (iii) a $0.6 million increase in revenue from the barge business, mainly due to increased CoA/voyage revenues, related to higher liquid cargo moved. The overall increase was partially mitigated by a $0.3 million decrease in sales of products due to the decrease in the Paraguayan liquid port’s volume of products sold.
Net Income attributable to Navios Holdings’ common stockholders was $45.0 million for the three month period ended June 30, 2022, as compared to a $24.9 million for the same period in 2021. This increase in Net Income was mainly due to (i) a $18.3 million increase in EBITDA as discussed in the paragraph below; (ii) a $1.2 million decrease in depreciation and amortization; (iii) a $0.8 million decrease in interest expense and finance cost, net; and (iv) a $0.1 million decrease in stock-based compensation expense. This overall increase of approximately $20.5 million was partially mitigated by (i) a $0.3 million increase in amortization of deferred drydock, special survey and other capitalized items and (ii) a $0.2 million increase in income tax expense.
Net Income of Navios Logistics, on a standalone basis, was $6.4 million for the three month period ended June 30, 2022 as compared to $1.1 million of Net Loss for the same period in 2021.
EBITDA of Navios Holdings for the three month period ended June 30, 2022 increased by $18.3 million to $98.9 million, as compared to $80.5 million for the same period in 2021. The increase in EBITDA was primarily due to (i) a $15.6 million increase in revenue; (ii) a $5.4 million decrease in impairment losses relating to the sale of drybulk vessels incurred in the three month period ended June 30, 2021; (iii) a $1.9 million increase in other income, net; (iv) a $1.2 million decrease in time charter, voyage and logistics business expenses; and (v) a $0.3 million increase in equity in net earnings from affiliate companies. This overall increase of $24.4 million was partially mitigated by (i) a $2.7 million increase in net income attributable to noncontrolling interest; (ii) a $2.0 million decrease in gain on bond extinguishment; (iii) a $0.9 million increase in general and administrative expenses (excluding stock-based compensation expenses); and (iv) a $0.5 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items).
EBITDA of Navios Logistics, on a standalone basis, was $31.7 million for the three month period ended June 30, 2022, as compared to $21.4 million for the same period in 2021.
First Half 2022 and 2021 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):
The information for the six month period ended June 30, 2022 and 2021 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.
(1) Net Income attributable to Navios Holdings’ common stockholders and Basic Earnings per share attributable to Navios Holdings’ common stockholders for the six month period ended June 30, 2022 include the impact of the $24.0 million upfront fee paid in the form of a convertible debenture in respect of NSM Loan I and NSM Loan II drawn down in January 2022.
(2) Net Income attributable to Navios Holdings’ common stockholders, EBITDA and Basic Earnings attributable to Navios Holdings’ common stockholders for the six month period ended June 30, 2021 include (i) $25.9 million in equity income in affiliate companies due to Navios Partners’ merger with Navios Containers effected on March 31, 2021; and (ii) approximately $25.9 million in impairment losses relating to the sale of drybulk vessels.
Revenue from the Dry Bulk Vessel Operations for the six month period ended June 30, 2022 increased by $8.9 million, or 5.9%, to $158.7 million, as compared to $149.8 million for the same period during 2021. The increase in dry bulk revenue was mainly attributable to the increase in the time charter and freight market during the six month period ended June 30, 2022. The TCE per day increased by 36.7% to $24,425 per day in the six month period ended June 30, 2022, as compared to $17,862 per day in the same period of 2021. This overall increase was partially mitigated by 1,691 fewer available days as compared to 2021, mainly due to (i) a decrease in available days of owned and bareboat-in vessels by 870 days following the sale of seven of the Company’s vessels in 2021; and (ii) a decrease in charter-in vessels’ available days by 821 days due to the redelivery to owners of five charter-in vessels in 2021 and the acquisition of one charter-in vessel in 2021, which was then sold to a related party.
Revenue from the Logistics Business was $128.3 million for the six month period ended June 30, 2022, as compared to $110.8 million for the same period in 2021. The increase was mainly attributable to (i) a $11.1 million increase in revenue from the port terminal business mainly due to higher volumes transshipped in the grain port terminal due to increased Uruguayan soybean production and exports and higher tariffs at the iron ore terminal; (ii) a $6.7 million increase in revenue from the cabotage business mainly due to more operating days; and (iii) a $1.4 million increase in revenue from the barge business, mainly due to increased CoA/voyage revenues, related to higher liquid cargo moved. The overall increase was partially mitigated a $1.6 million decrease in sales of products due to the decrease in the Paraguayan liquid port’s volume of products sold.
Net Income attributable to Navios Holdings’ common stockholders was $40.0 million for the six month period ended June 30, 2022, as compared to $25.1 million Net Income attributable to Navios Holdings’ common stockholders for the same period in 2021. This increase in Net Income was mainly due to (i) a $37.5 million increase in EBITDA as discussed in the paragraph below; (ii) a $3.1 million decrease in depreciation and amortization; and (iii) a $0.2 million decrease in stock-based compensation expense. This overall increase of approximately $40.8 million was partially mitigated by (i) a $24.0 million upfront fee paid in the form of a convertible debenture in respect of NSM Loan I and NSM Loan II drawn down in January 2022; (ii) a $0.9 million increase in income tax expense; (iii) a $0.5 million increase in interest expense and finance cost, net; and (iv) a $0.5 million increase in amortization of deferred drydock, special survey and other capitalized items.
Net Income of Navios Logistics, on a standalone basis, was $6.1 million for the six month period ended June 30, 2022 as compared to $2.1 million for the same period in 2021.
EBITDA of Navios Holdings for the six month period ended June 30, 2022 increased by $37.5 million to $172.7 million, as compared to $135.1 million for the same period in 2021. The increase in EBITDA was primarily due to (i) a $26.4 million increase in revenue; (ii) 25.9 million decrease in impairment losses relating to the sale of drybulk vessels incurred during the six month period ended June 30, 2021; and (iii) a $10.0 million decrease in time charter, voyage and logistics business expenses. This overall increase of $62.3 million was partially mitigated by (i) a $17.6 million decrease in equity income in affiliate companies due to Navios Partners’ merger with Navios Containers effected on March 31, 2021; (ii) a $2.8 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (iii) a $2.1 million decrease in gain on bond extinguishment; (iv) a $1.4 million increase in net income attributable to noncontrolling interest; and (v) a $0.8 million increase in general and administrative expenses (excluding stock-based compensation expenses).
EBITDA of Navios Logistics, on a standalone basis, was $55.6 million for the six month period ended June 30, 2022, as compared to $44.7 million for the same period in 2021.
Fleet Summary Data:
The following table reflects certain key indicators indicative of the performance of Navios Holdings’ dry bulk operations (excluding the Navios Logistics’ fleet) and its fleet performance for the three and six month periods ended June 30, 2022 and 2021, respectively. As a result of the Transaction, Navios Holdings no longer directly owns dry bulk vessels.
(1) Available days are the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to major repairs or repairs under guarantee, vessel upgrades, drydocking or special surveys and ballast days relating to voyages. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
(2) Operating days are the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances.
(3) Fleet utilization is the percentage of time that Navios Holdings’ vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period.
(4) Equivalent Vessels are defined as the available days of the fleet divided by the number of the calendar days in the period.
(5) TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of contracts for the number of available days of the fleet.
https://navios.gcs-web.com/news-releases/news-release-details/navios-maritime-holdings-inc-reports-financial-results-second-16
Source: Navios Maritime Holdings Inc.