Navios Maritime Partners Q4 and FY 2013 Earnings Conference Call

Navios Maritime Partners Q2 2010 Earnings Presentation(NYSE: NMM)
Statements in this presentation which are not statements of historical fact are “forward-looking statements” (as such term is defined in Section 21E
of the Securities Exchange Act of 1934, as amended). These forward-looking statements are based on the information available to, and the
expectations and assumptions deemed reasonable by, the Company at the time this presentation was made. Although the Company believes that
the assumptions underlying such statements are reasonable, it can give no assurance that they will be attained. The Company undertakes no
obligation to update any forward-looking statements, whether as a result of new information or future events, unless it is required to do so under the
securities laws. The Company makes no prediction or statement about the performance of its common units. For the selected financial data
presented herein, Navios Partners compiled consolidated statement of operations for the three month periods ended December 31, 2013 and
.
30 Vessels
8 Capesize, 14 Panamax and 3 Ultra Handymax Dry Bulk Carriers
5 Container vessels
100% Membership Interest
Navios GP L.L.C.
NYSE: NM
Equity Term Loan B
3
48% increase in share price
43% increase in number of vessels
December 2013 January 2013
Access to Public Markets
Solidified cash flow generation and strengthened fleet operating metrics
Diversified source of financing - issued Term Loan B NMM is the sole international shipping business in this market
Diversifies sources of financing from existing lending sources
Significant annual cash saving compared to traditional bank financing
“Add-on” flexibility with identical terms and covenant package
Favorable Terms: Margin: L+425 bps; Term: 5 Years; Amortization: 1%
Less restrictive covenants compared to traditional bank financing
Entered container segment – acquired five containers with long-term contracts $275 million acquisition of five container vessels with long-term employment with an investment grade counterparty
Ten-year charters (Navios Partners’ option to terminate after year seven) at $30,119 net per day per vessel
Strategic entry into container segment at favorable asset values
Market volatility risk mitigated by long-term contracts and option to terminate after year seven
Significant EBITDA and free cash flow generation
Reduction of cash flow breakeven; Strengthening of operating metrics
Capturing the drybulk market recovery Acquired dry bulk vessels in the open market at favorable asset prices
$21.0 million (1) (19.4%) value appreciation compared to acquisition price
Staggered charter expirations of shorter term vessels towards 2014 to target improving market
4 (1) As per Clarksons’ charter free values as of December 2013
CONFIDENTIAL – DO NOT DISTRIBUTE
(1) Includes restricted cash of $1.2 million
(2) Paid in January 2014 for the delivery of the Navios La Paix and the Navios Sun
Liquidity
of vessels (2) 33.4
5
275.0% number of vessels
389.0% Operational fleet capacity
• Exercised purchase option for
Navios Fantastiks and Navios
Navios Group
2008 highs
open market
year charters
controlled fleet of 142 vessels
of which 83 are dry bulk
vessels
days Q4 2013 Q4 2012
Y-O-Y
Variance
EBITDA 35.6 61.3* (41.8%) 153.4 177.4* (13.6%)
Net Income 10.1 40.1* (74.8%) 59.0 95.9* (38.5%)
EPU 0.13 0.65* (80.0%) 0.84 1.61* (47.8%)
Operating Surplus 26.1 54.2* (51.8%) 125.5 148.9* (15.7%)
Replacement Capex
Active Vessels 28 21 33.3% 28 21 33.3%
Available Days 2,216 1,914 15.8% 7,952 7,002 13.6%
EBITDA represents net income plus interest and finance costs plus depreciation and amortization and income taxes. EBITDA is presented because Navios Partners believes that
EBITDA is a basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Partners’ ability to service and/or incur indebtedness, pay capital
expenditures, meet working capital requirements and pay dividends. EBITDA is a “non-GAAP financial measure” and should not be considered a substitute for net income, cash flow from
operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of
profitability or liquidity. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA used here may not
be comparable to that used by other companies due to differences in methods of calculation.
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated maintenance and replacement capital
expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue
generated by, Navios Partners’ capital assets. Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a
partnership’s ability to make quarterly cash distributions. Operating Surplus is not required by US GAAP and should not be considered as an alternative to net income or any other
indicator of Navios Partners’ performance required by US GAAP.
* Positively affected by $22.5 million accounting effect from the restructuring of the credit default insurance
Q4 & YE December 31, 2013 Earnings Highlights
7
Other current assets 18.0 8.4
Vessels, net 1,026.2 721.4
Total Assets 1,250.1 955.0
Long term debt, current portion 5.4 23.7
Long term debt 528.0 276.0
Total partners’ capital 706.5 618.7
Total liabilities & partners’ capital 1,250.1 955.0
Net Debt / Asset Value (charter attached) (2) 45.6% 32.4%
(1) Includes restricted cash of $1.2 million and amounts held in escrow of $33.4 million
(2) Considers Clarksons’ charter attached values of owned vessels and chartered-in vessels (less the exercise values) as of December 2013
Q4 2013 Cash Distribution
Operating Surplus: $26.1 million
Common Unit Coverage: 0.83x
Distribution: $32.6 million
Cash Distribution: $0.4425 per unit for Q4 2013 ($1.77 annually)
Record Date: February 10, 2014
Payment Date: February 14, 2014
(1) Pro Forma coverage is adjusted to include the full quarter run rate operating surplus of the fleet including the Container vessels recently acquired
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Committed to minimum distribution of $1.77 per unit through 2015
Holdings through 2017
Operating costs per day for the next two years beginning January 1 2014:
$5,700 for Capesizes, $4,800 for Panamax, $4,750 for Ultra-Handymax
and $7,500 for Containers, including estimated drydock costs
• Average 3.6% increase of fees including estimated drydock costs
• Actual drydock costs would now be paid in lump sum to Navios Holdings at occurrence
• New fees approximately 22% below industry average estimates for 2014
Material Other Developments
(1) EBITDA estimates assume expenses approximating operating cost structure under the amended Management Agreement and 360 revenue days per year. Aggregate EBITDA assumes increase in operating
costs as per the Management Agreement.
(2) Annual Free Cash Flow represents EBITDA minus interest expense and loan repayments
(3) Source: Drewry Shipping Consultants Annual Report 2013/2014, estimated 2014 costs; proforma for full fleet, includes estimated drydock amortization
10
Pro Forma Combined New Opex
$108.0 million acquisition of four drybulk Japanese-built vessels at favorable asset prices $21.0 million current asset value appreciation compared to the acquisition price
− Funded with $74.8 million of proceeds from Term Loan B and $33.2 million cash from balance sheet
Breakeven of $8,601 per day per vessel
Delivery of four vessels Navios Sun, 2005 built, 76,619 dwt Kamsarmax vessel; chartered out for about a year at a rate of $13,063, net per day
Navios La Paix, 2014 built, 61,485 dwt Ultra-handymax vessel in January 2014; chartered out for about two years based
on the BSI TC index plus 10%, with a minimum rate of $9,500 net per day
Navios Harmony, 2006 built, 82,790 dwt Kamsarmax vessel; chartered out for about 4 to 6 months at $14,725, net per day
Navios Joy, 2013 built, 181,389 dwt Capesize vessel; chartered out for about 3 years at a rate of $19,000, net per day
Opportunity to participate in Navios Europe Entity acquiring a ten-vessel fleet (five containers and five tankers) from debtors of HSH Nordbank AG in distressed sales
Investment of $0.5 million for 5% equity interest – preferred return of 12.7%
Average Charter Duration: approx. 3.4 years
91.6% of contracted revenue secured by
charters running longer than 3 years
Diversified customer base with
2014 Revenue by Charterer Contracted Revenue
(1) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was affirmed and will be performed by KLC on its original
terms following an interim suspension period during which NMM trades the vessel directly
(2) Ex Constellation Energy Group 11
(1) Daily charter-out rate net of commissions or net insurance or settlement proceeds, where applicable
(2) Navios Partners fleet age weighted by DWT
(3) Source: Drewry Shipping Consultants, December 2013
(4) Source: Clarksons’
(5) Profit sharing 50% above $16,984/day based on Baltic Panamax TC Avg
(6) Profit sharing: The owners will receive 100% of the first $1,500 in profits above the base rate and
thereafter all profits will be split 50% to each party
(7) Profit sharing : The owners will receive 100% of the first $2,500 in profits above the base rat e and
thereafter all profits will be split 50% to each party
(8) Profit sharing 50% on actual results above the base rates
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Hyundai Busan
Hyundai Shanghai
Hyundai Tokyo
Staggered Charter Expirations (1)
$12,000 Sep 2015
$13,063 Feb 2015
$10,000 Jul 2014
$50,588 Sept 2015
$41,325 Nov 2019
$13,500 Jul 2014
Average Age of Navios Partners’ Dry Bulk Fleet(2): 6.7 years
Average Age of Dry Bulk Industry Fleet (3): 9.3 years
(6)
(7)
(9) The charter rate is based on the Panamax time charter Index.
(10) The charter rate is based on the Supramax time charter Index plus 10% with a minimum rate of $9,500
net per day
(11) The charterer has been granted an option to extend the charter for two optional years, the first at
$22,325 (net) per day and the second at $25,650 (net) per day
(12) Profit sharing 50% above $38,500/day based on Baltic Exchange Capesize TC Average
(13) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was affirmed and will
be performed by KLC on its original terms following an interim suspension period during which Navios
Partners trades the vessel directly. Rate assumes amortization of payment of $13.3 million received
upfront covering the interim suspension period.
Average Age of Navios Partners’ Container Fleet(2): 7.5 years
Average Age of Container Industry Fleet (4): 10.9 years
Average Age of Navios Partners’ Combined Fleet(2): 6.7 years
6TC BSI + 10% Dec 2015 (10)
$10,688 Apr 2014
4.7 5.1 5.4
3.0 3.7 3.9
Emerging and developing economies World Advanced economies
IMF Latest Revisions of GDP Growth (%) January 2014 Δ October 2013
World GDP 2014 3.7 3.6
2015 3.9 N/A
2015 2.3 N/A
2015 5.4 N/A
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
T ra
d e
World Dry Bulk Trade 1980 - 2013
2.8%
Source: China NBS, TSI, Bloomberg Nov 2013
Available Incremental Global Iron Ore
Due 2013 to 2016
Iron ore future prices currently showing a decline over the next two years to
$101/ton in 2017 from a current spot price of $123/ton
Low iron ore prices mean Chinese domestic ore will become uncompetitive,
resulting in substitution of higher quality imports for low quality domestic ores
Increased steel production in China will also cause increased iron ore imports
(million tons)
57.7
183.4
351.2
555.7
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
$ /m
t
1/21/14 Iron Ore Price: $123/mt
Multi-Year Low in the Iron Ore
Price (September 2012): $87/mt
Chinese Miners
Sources: World Steel Association, World Bank,
National Bureau of Statistics of China/Mysteel, UN
Chinese Urbanization & Steel Production
Urban Rural
Stockpiles
0
50
100
150
200
250
300
350
Seaborne Imports (incl Lignite) Sources: Clarksons, Carbon Club
It’s Not Just About Iron Ore…
2009 – 2013 CAGR = 24% 2006 – 2013 CAGR = 21%
Indian Seaborne Coal Imports Chinese Seaborne Coal Imports (million tons) (million tons)
17
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• Grain shipments, while small relative to iron ore and coal, account for a large amount of vessel
demand as measured in vessel days
• China’s grain imports will more than double from 2012 to 2022 as the country improves its diet
and consumes more meat
• It takes eight tons of grain to produce one ton of beef
0
20
40
60
80
100
120
140
160
M e
a t
C o
n s
u m
p ti
o n
OECD
China
As of Jan 1, 2013 As of Jan 1, 2014
Source: Clarksons
2013 • 62.1 million actual DWT delivered; 101.2 million DWT projected (39% non-delivery by DWT-preliminary)
• 780 actual deliveries, 1,272 newbuilds projected (39% non-delivery by # of vessels -preliminary)
2012 • 98.2 million actual DWT delivered; 138.9 million DWT projected (29% non-delivery by DWT)
• 1,192 actual deliveries, 1,665 newbuilds projected (28% non-delivery by # of vessels)
• 1,147 actual deliveries, 1,691 newbuilds projected (32% non-delivery by # of vessels)
• 957 actual deliveries, 1,528 newbuilds projected (38% non-delivery by # of vessels)
2009
• 43.1 million actual DWT delivered; 71.3 million DWT projected (40% non-delivery by DWT)
• 546 actual deliveries, 962 newbuilds projected (43% non-delivery by # of vessels)
Orderbook by year of delivery
M ill
Before non-delivery
Actual non-
January 2014 (before non-
Accelerated Scrapping(1)
• 2014 YTD scrapping ≈ 0.7 million DWT – 0.09% of fleet DWT
• 2013 scrapping ≈ 22.2 million DWT – 3.3% of fleet DWT
• 2012 scrapping ≈ 33.6 million DWT - 5.5% of fleet DWT
• 2013 total dry bulk fleet ≈ 721.5 million DWT - Non delivery ≈ 39%
• Net fleet growth for 2013 = 5.9%
4.9%
6.5%
0%
10%
(% DWT)
Scrapping Dynamics
1.2% 1.1%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(P) 2014(F)
0.1%
0
2000
4000
6000
8000
10000
12000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Baltic Dry Index
Source: SSY, Clarksons
Baltic Exchange Dry Index* 2002 – 2014 BDI 2002 to date
* As of 1/21/2014
Secured Revenue Stream
• Majority of long-term contracts of drybulk fleet insured by:
AA rated insurance company in the EU
Sponsor, Navios Maritime Holdings Inc.
• Average charter duration is approx. 3.4 years − 74.7% revenue days covered in 2014
• Staggered charter expirations minimize charter renewal risk
• Strong creditworthy counterparties (Bunge, Mitsui, Cosco,
Rio Tinto, Cargill, Exelon, HMM, etc.)
Continued Access
since May 2009 ~ $720 million equity
~ $440 million public debt
Young, Growing Fleet • More than quadrupled fleet capacity since Nov. 2007 IPO
• Fleet age of 6.7 years (1)
Company Highlights
• Committed to a minimum distribution of $1.77 through
2014
World Container Trade Container Trade Growth % World GDP Growth %
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1.3%
2.8%
0%
1%
2%
3%
4%
5%
Year Total Demolition
27
1,840
1,624
1,039
1,546
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
As of Jan 1, 2013 As of Jan 1, 2014 Source: Clarksons
2013 • 1.840 million TEU projected, 1.336 million actual deliveries (27% non deliveries by TEU);
303 vessels expected, 201 delivered (34% non-delivery by number of vessels)
2012 • 1.578 million TEU projected, 1.253 million actual deliveries (21% non-delivery by TEU)
Orderbook by year of delivery
‘0 0 0
Before
Vessels Type Built DWT Charter Rate ($)(1) Expiration Date(2) Dropdown
Navios Apollon Ultra-Handymax 2000 52,073 13,500 (3) 07/31/2014 Yes
Navios Soleil Ultra-Handymax 2009 57,337 8,906 03/11/2014
Navios La Paix Ultra-Handymax 2014 61,485 6TC BSI + 10% (11) 12/07/2015
Navios Gemini S Panamax 1994 68,636 8,550 01/24/2014
Navios Libra II Panamax 1995 70,136 12,000 (3) 09/17/2015
Navios Felicity Panamax 1997 73,867 12,000 (4) 05/08/2014
Navios Galaxy I Panamax 2001 74,195 21,937 02/03/2018
Navios Helios Panamax 2005 77,075 12,513 12/29/2014
Navios Hyperion Panamax 2004 75,707 10,213
4TC BPI (12)
Navios Harmony Panamax 2006 82,790 14,725 03/10/2014
Navios Sun Panamax 2005 76,619 13,063 02/17/2015
Navios Fantastiks Capesize 2005 180,265 14,678 03/31/2014
Navios Aurora II Capesize 2009 169,031 41,325 11/24/2019 Yes
Navios Pollux Capesize 2009 180,727 40,888 04/24/2019 Yes
Navios Fulvia Capesize 2010 179,263 50,588 09/30/2015 Yes
Navios Melodia (6) Capesize 2010 179,132 29,356 (7) 09/19/2022 Yes
Navios Luz Capesize 2010 179,144 29,356 (8) 11/16/2020 Yes
Navios Buena Ventura Capesize 2010 179,259 29,356 (8) 10/28/2020 Yes
Navios Joy Capesize 2013 181,389 19,000(9) 06/11/2016
Total – 23 Vessels 2,502,351 Chartered-In Vessels
Vessels Type Built DWT Charter Rate ($)(1) Expiration Date(2) Purchase Option Dropdown
Navios Prosperity Panamax 2007 82,535 12,000 (4) 05/30/2014 Yes
Navios Aldebaran Panamax 2008 76,500 11,000 (10) 06/02/2014 Yes
Total – 2 Vessels 159,035
Total Dry Bulk Fleet – 25 Vessels 2,661,386 DWT (1)Daily charter-out rate net of commissions or net insurance or settlement proceeds, where applicable
(2) Assumed midpoint of redelivery by charterers
(3) Profit sharing 50% on actual results above the base rates
thereafter all profits will be split 50% to each party.
(5) Profit sharing 50% above $16,984/day based on Baltic Panamax TC Average
(6) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was affirmed and will
be performed by KLC on its original terms following an interim suspension period during which Navios
Partners trades the vessel directly. Rate assumes amortization of payment of $13.3 million received upfront
covering the interim suspension period.
(9) The charterer has been granted an option to extend the charter for two optional years, the first at
$22,325 (net) per day and the second at $25,650 (net) per day
thereafter all profits will be split 50% to each party.
(11) The charter rate is based on the Supramax time charter Index plus 10% with a minimum rate of $9,500
net per day
(12) The charter rate is based on the Panamax time charter Index.
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Navios Partners Fleet - Containers Container Vessels Vessels Type Built TEU Charter Rate ($)(1) Expiration Date(2)
Hyundai Hong Kong Container 2006 6,800 30,119 12/2023
Hyundai Singapore Container 2006 6,800 30,119 12/2023
Hyundai Busan Container 2006 6,800 30,119 12/2023
Hyundai Shanghai Container 2006 6,800 30,119 12/2023
Hyundai Tokyo Container 2006 6,800 30,119 12/2023
Total – 5 Vessels 34,000
(1) Daily charter-out rate net of commissions
(2) Assumed midpoint of redelivery by charterers. The vessels are fixed on ten year charters with Navios Partners’ option to terminate after year 7.
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Navios Maritime Partners Q4 and FY 2013 Earnings Conference Call

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Transcript of Navios Maritime Partners Q4 and FY 2013 Earnings Conference Call