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Navios Maritime Partners L.P. Hails Fleet of 35 Modern Bulkers, Looking to Divest Containerships

Navios Maritime Partners L.P., an international owner and operator of dry cargo vessels, reported its financial results for the second quarter and six months ended June 30, 2018.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “I am pleased with the results for the second quarter, for which Navios Partners had $34.7 million of adjusted EBITDA and reported $9.2 million of adjusted net income. We declared a quarterly distribution of $0.02 per unit for the second quarter, representing a current yield of approximately 4%.”

Angeliki Frangou continued, “Over the past two years, we used excess cash flow from operations and financing activities to renew and expand our fleet to 35 drybulk vessels. We also leveraged historic weakness in the container sector by establishing Navios Maritime Containers Inc., a growth vehicle with 26 containerships. Having taken advantage of these opportunities, we restored distributions to unitholders in the first quarter of this year and are seeking to deleverage with excess cash flow and the contemplated sale of our remaining containerships. If and when these sales are completed, Navios Partners will host the drybulk business and Navios Containers will hold the container business, thereby simplifying our business structure.”

Drybulk Fleet

Agreement to acquire two vessels
In July 2018, Navios Partners agreed to acquire the Navios Sphera, a 2016-built Panamax vessel of 84,872 dwt and the Navios Mars, a 2016-built Capesize vessel of 181,259 dwt from its affiliate, Navios Maritime Holdings Inc. for a purchase price of $79.0 million. These vessels are time chartered out on index-linked charters until January 2021 and February 2019, respectively.

The acquisition of the vessels is expected to be partially financed with a $44.0 million new term loan facility and the balance with available cash. The loan facility has an amortization profile of five years, matures in July 2023 and bears interest at LIBOR plus 290 bps per annum.

The transaction was approved by the Conflicts Committee of the Board of Directors of Navios Partners.

Deliveries
On June 7, 2018, Navios Partners took delivery of the Navios Altair I, a 2006-built Panamax vessel of 74,475 dwt, acquired from an unrelated third party for a purchase price of $11.0 million.

On May 21, 2018, Navios Partners took delivery of the Navios Symmetry, a 2006-built Panamax vessel of 74,381 dwt, acquired from an unrelated third party, for a purchase price of $11.0 million.

On May 9, 2018, Navios Partners took delivery of the Navios Apollon I, a 2005-built Panamax vessel of 87,052 dwt, acquired from an unrelated third party, for a purchase price of approximately $13.0 million.

Sale of YM Unity and YM Utmost

On July 2, 2018, Navios Partners sold to its affiliate, Navios Maritime Containers Inc. (“Navios Containers”) the YM Unity and the YM Utmost, two 2006-built containerships of 8,204 TEU each, for a sale price of $67.0 million. The loss on sale of the vessels amounted to $37.9 million and was recognized in the second quarter of 2018. Navios Partners used a portion of the sale proceeds to repay $20.2 million of its outstanding debt. As a result of the sales, the YM Unity and the YM Utmost were released from security of the Term Loan B Facility. In exchange, four drybulk vessels and $4.0 million in cash substituted the two vessels as collateral to the Term Loan B Facility.

Sale of Containerships

On June 11, 2018, Navios Partners agreed to sell the Hyundai Hongkong, a 2006-built, 6,800 TEU containership to its affiliate, Navios Containers, for a sale price of approximately $36.0 million. The vessel is expected to be delivered to Navios Containers in the third quarter of 2018.

Navios Partners also granted options to Navios Containers to acquire four additional 2006-built, 6,800 TEU containerships (the Hyundai Singapore, the Hyundai Busan, the Hyundai Shanghai and the Hyundai Tokyo) for a purchase price of $36.0 million per vessel. Each of the four vessels are sister ships to the Hyundai Hongkong and have the same time charter employment in place.

All of the acquisitions are subject to certain conditions, and there can be no assurances that these acquisitions will occur in whole or in part.

The transaction was approved by the Conflicts Committee of the Board of Directors of Navios Partners.

Cash Distribution

The Board of Directors of Navios Partners declared a cash distribution for the second quarter of 2018 of $0.02 per unit. The cash distribution is payable on August 10, 2018 to all unitholders of record as of August 7, 2018.

Long-Term Cash Flow

Navios Partners has entered into medium to long-term time charter-out agreements for its vessels with a remaining average term of approximately 2.0 years. Navios Partners has currently contracted out 88.8% of its available days for 2018, 35.6% for 2019 and 23.5% for 2020, including index-linked charters, expecting to generate revenues (excluding index-linked charters) of approximately $155.8 million, $58.4 million and $65.9 million, respectively. The average expected daily charter-out rate for the fleet is $16,109, $22,697 and $29,992 for 2018, 2019 and 2020, respectively.

EARNINGS HIGHLIGHTS

For the following results and the selected financial data presented herein, Navios Partners has compiled consolidated statements of operations for the three and six month periods ended June 30, 2018 and 2017. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. Adjusted EBITDA, Adjusted Earnings per Common unit, Adjusted Net Income and Operating Surplus are non-GAAP financial measures and should not be used in isolation or substitution for Navios Partners’ results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

As of August 29, 2017, Navios Containers was no longer consolidated and commenced being accounted for under the equity method of accounting. As Navios Containers had operations during the three and six month periods ended June 30, 2017, the table below includes the impact of Navios Containers in the consolidated financial results and selected financial data for such periods.

(1) Adjusted Net Income and Adjusted Earnings per Common unit for the three month period ended June 30, 2018 have been adjusted to exclude a $37.9 million impairment loss related to the sale of two of our vessels, a $0.6 million equity compensation expense and a $0.2 million write-off of deferred finance fees related to $20.2 million debt repayment in the third quarter of 2018.
(2) Adjusted EBITDA for the three month period ended June 30, 2018 has been adjusted to exclude a $37.9 million impairment loss related to the sale of two of our vessels and a $0.6 million equity compensation expense.
(3) Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per Common unit for the three month period ended June 30, 2017 have been adjusted to exclude a $0.5 million equity compensation expense.
(4) Adjusted Net Income and Adjusted Earnings per Common unit for the six month period ended June 30, 2018 have been adjusted to exclude a $37.9 million impairment loss related to the sale of two of our vessels, a $1.2 million equity compensation expense and a $0.2 million write-off of deferred finance fees related to $20.2 million debt repayment in the third quarter of 2018.
(5) Adjusted EBITDA for the six month period ended June 30, 2018 has been adjusted to exclude a $37.9 million impairment loss related to the sale of two of our vessels and a $1.2 million equity compensation expense.
(6) Adjusted Net Income and Adjusted Earnings per Common unit for the six month period ended June 30, 2017 have been adjusted to exclude a $3.2 million write-off of deferred finance fees and discount related to the refinancing of the Term Loan B Facility, a $1.5 million allowance for doubtful accounts, a $1.3 million loss related to the sale of one of our vessels and a $0.9 million equity compensation expense.
(7) Adjusted EBITDA for the six month period ended June 30, 2017 has been adjusted to exclude a $1.5 million allowance for doubtful accounts, a $1.3 million loss related to the sale of one of our vessels and a $0.9 million equity compensation expense.

Three month periods ended June 30, 2018 and 2017

The details below exclude the impact of the consolidation of Navios Containers for the periods presented as it is intended to provide investors with a clearer picture of Navios Partners on a going forward basis. Navios Containers’ effect on time charter and voyage revenues and EBITDA for the period from April 28, 2017 (date of inception) to June 30, 2017 was $3.1 million and 2.3 million, respectively.

Time charter and voyage revenues for Navios Partners for the three month period ended June 30, 2018 increased by $11.3 million, or 24.0%, to $58.2 million, as compared to $46.9 million for the same period in 2017. The increase in time charter and voyage revenues was mainly attributable to: (i) the increase in revenue following the acquisition of the seven vessels in 2017 and the three vessels in 2018; and (ii) the increase in available days of the fleet to 3,366 days for the three month period ended June 30, 2018, as compared to 2,844 days for the three month period ended June 30, 2017, mainly due to the increased fleet. That increase was partially mitigated by the decrease in revenue due to the sales of the Navios Apollon and the Navios Gemini S in 2017.

EBITDA of Navios Partners for the three month period ended June 30, 2018 was negatively affected by the accounting effect of a: (i) $37.9 million impairment loss on the sale of the YM Unity and the YM Utmost; and (ii) $0.6 million equity compensation expense. EBITDA of Navios Partners for the three month period ended June 30, 2017 was negatively affected by the accounting effect of a $0.5 million equity compensation expense. Excluding these items, Adjusted EBITDA increased by $4.4 million to $34.7 million for the three month period ended June 30, 2018, as compared to $30.3 million for the same period in 2017. The increase in Adjusted EBITDA was primarily due to: (i) an $11.3 million increase in revenue; (ii) a $0.3 million decrease in other expenses; and (iii) a $1.6 million increase in equity in net earnings of affiliated companies. The above increase was partially mitigated by a: (i) $2.8 million increase in time charter and voyage expenses; (ii) $2.6 million increase in management fees due to the increased fleet; (iii) $0.6 million increase in general and administrative expenses; and (iv) $2.8 million decrease in other income.

The reserves for estimated maintenance and replacement capital expenditures for the three month periods ended June 30, 2018 and 2017 were $6.4 million and $3.5 million, respectively (please see “Reconciliation of Non-GAAP Financial Measures” in Exhibit 3).

Navios Partners generated an operating surplus for the three month period ended June 30, 2018 of $19.8 million, as compared to $22.4 million for the three month period ended June 30, 2017. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions.

Net Income of Navios Partners for the three month period ended June 30, 2018 was negatively affected by the accounting effect of a: (i) $37.9 million impairment loss on the sale of the YM Unity and the YM Utmost; (ii) $0.6 million equity compensation expense; and (iii) $0.2 million write-off of deferred finance fees. Net Income of Navios Partners for the three month period ended June 30, 2017 was negatively affected by the accounting effect of a $0.5 million equity compensation expense. Excluding these items, Adjusted Net Income for the three month period ended June 30, 2018 amounted to $9.2 million compared to $4.1 million for the three month period ended June 30, 2017. The increase in Adjusted Net Income of $5.1 million was due to a: (i) $4.4 million increase in adjusted EBITDA; (ii) $0.1 million decrease in direct vessel expenses; (iii) $3.0 million decrease in depreciation and amortization expense; and (iv) $0.1 million increase in interest income. The above increase was partially mitigated by a $2.4 million increase in interest expense and finance cost, net.

Six month periods ended June 30, 2018 and 2017

The details below exclude the impact of the consolidation of Navios Containers for the periods presented as it is intended to provide investors with a clearer picture of Navios Partners on a going forward basis. Navios Containers’ effect on time charter and voyage revenues and EBITDA for the period from April 28, 2017 (date of inception) to June 30, 2017 was $3.1 million and 2.3 million, respectively.

Time charter and voyage revenues for Navios Partners for the six month period ended June 30, 2018 increased by $21.9 million, or 24.5%, to $111.2 million, as compared to $89.3 million for the same period in 2017. The increase in time charter and voyage revenues was mainly attributable to: (i) the increase in revenue following the acquisition of the seven vessels in 2017 and the three vessels in 2018; and (ii) the increase in TCE to $16,295 per day for the six month period ended June 30, 2018, from $15,593 per day for the six month period ended June 30, 2017 due to the increase in the freight market. That increase was partially mitigated by the decrease in revenue due to the sales of the MSC Cristina, the Navios Apollon and the Navios Gemini S in 2017. The available days of the fleet increased to 6,552 days for the six month period ended June 30, 2018, as compared to 5,639 days for the six month period ended June 30, 2017, mainly due to the increased fleet.

EBITDA of Navios Partners for the six month period ended June 30, 2018 was negatively affected by the accounting effect of a: (i) $37.9 million impairment loss on the sale of the YM Unity and the YM Utmost; and (ii) $1.2 million equity compensation expense. EBITDA of Navios Partners for the six month period ended June 30, 2017 was negatively affected by the accounting effect of a: (i) $1.5 million allowance for doubtful accounts; (ii) $1.3 million loss related to the sale of the MSC Cristina and; (iii) $0.9 million equity compensation expense. Excluding these items, Adjusted EBITDA increased by $10.0 million to $66.2 million for the six month period ended June 30, 2018, as compared to $56.2 million for the same period in 2017. The increase in Adjusted EBITDA was primarily due to a: (i) $21.9 million increase in revenue; and (ii) $2.7 million increase in equity in net earnings of affiliated companies. The above increase was partially mitigated by a: (i) $3.1 million increase in time charter and voyage expenses; (ii) $5.0 million increase in management fees due to the increased fleet; (iii) $0.8 million increase in general and administrative expenses; (iv) $5.3 million decrease in other income; and (v) $0.4 million increase in other expenses.

The reserves for estimated maintenance and replacement capital expenditures for the six month periods ended June 30, 2018 and 2017 were $12.4 million and $6.7 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Navios Partners generated an operating surplus for the six month period ended June 30, 2018 of $37.2 million, compared to $39.9 million for the six month period ended June 30, 2017. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Net Income of Navios Partners for the six month period ended June 30, 2018 was negatively affected by the accounting effect of a: (i) $37.9 million impairment loss on the sale of the YM Unity and the YM Utmost; (ii) $1.2 million equity compensation expense; and (iii) $0.2 million write-off of deferred finance fees. Net Income of Navios Partners for the six month period ended June 30, 2017 was negatively affected by the accounting effect of a: (i) $3.2 million write-off of deferred finance fees and discount related to the refinancing of the Term Loan B Facility; (ii) $1.5 million allowance for doubtful accounts; (iii) $1.3 million loss related to the sale of the MSC Cristina; and (iv) $0.9 million equity compensation expense. Excluding these items, Adjusted Net Income for the six month period ended June 30, 2018 amounted to $15.2 million compared to $4.8 million for the six month period ended June 30, 2017. The increase in Adjusted Net Income of $10.5 million was due to a: (i) $10.0 million increase in Adjusted EBITDA; (ii) $0.2 million decrease in direct vessel expenses; (iii) $4.9 million decrease in depreciation and amortization expense; and (iv) $0.5 million increase in interest income. The above increase was partially mitigated by a $5.1 million increase in interest expense and finance cost, net.
Full Report

Source: Navios Maritime Partners L.P.

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