Navios Maritime Partners L.P., an international owner and operator of dry cargo vessels, today reported its financial results for the third quarter and nine months ended September 30, 2019.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “I am pleased with the strong financial results for the third quarter of 2019. Navios Partners reported $41.3 million in EBITDA, $16.9 million in Net Income and $1.67 in Earnings per Unit. Navios Partners also declared a quarterly distribution of $0.30 cents per unit, representing a current yield of approximately 6%.”
Angeliki Frangou continued, “Navios Partners has a strong balance sheet and is competitively positioned in a healthy charter market. Navios Partners earned a TCE rate of $18,778 per day for the third quarter,
and virtually all of our 37 vessels are on the water generating revenue.”
Cash Distribution
The Board of Directors of Navios Partners declared a cash distribution for the third quarter of 2019 of $0.30 per unit. The cash distribution is payable on November 14, 2019 to all unitholders of record as of November 7, 2019.
Term Loan B Refinancing
In October 2019, Navios Partners fully repaid its Term Loan B due in September 2020. The outstanding balance of the Term Loan B at December 31, 2018 was $418.5 million. Navios Partners funded the refinancing as follows:
- $301.3 million financing from commercial banks, with an average (a) amortization profile of 7.1 years and (b) annual interest of LIBOR plus 290 bps;
- $49.5 million financing through sale and leaseback transactions. The sale and leaseback transactions have an average (a) duration of 9.4 years and (b) implied interest rate of 6.4%. There are no financial covenants or loan-to-value requirements in the sale and leaseback transactions; and
- $67.7 million from cash on the balance sheet.
As a result of the refinancing, Navios Partners has diversified and extended the maturities of its debt through 2030. Furthermore, there are no debt maturities until the third quarter of 2021.
Amendment of the Management Agreement and the Administrative Services Agreement
In August 2019, Navios Partners extended the duration of its existing management agreement (the “Management Agreement”) with Navios Ship Management Inc. (the “Manager”) until January 1, 2025. In addition management fees are fixed for two years commencing from January 1, 2020 at: (a) $4,450 per day per Panamax Vessel; (b) $4,350 per day per Ultra-Handymax Vessel; (c) $5,410 per day per Capesize Vessel; and (d) $6,900 per day per 6,800 TEU Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 unless agreed otherwise. Drydocking expenses are reimbursed at cost for all vessels.
In August 2019, Navios Partners extended the duration of its existing administrative services agreement with the Manager until January 1, 2025, which provide for allocable G&A costs.
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 96.6% of its available days for 2019, 49.1% for 2020 and 37.9% for 2021, including index-linked charters, expecting to generate revenues (excluding index-linked charters) of approximately $183.7 million, $86.3 million and $81.9 million, respectively. The average contracted daily charter-out rate for the fleet is $15,171, $26,220 and $28,031 for 2019, 2020 and 2021, 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 nine month periods ended September 30, 2019 and 2018. 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”).
- (1) Adjusted Net Income and Adjusted Earnings per Common Unit for the three month period ended September 30, 2019 have been adjusted to exclude a $1.4 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the third quarter of 2019.
- (2) Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Common Unit for the three month period ended September 30, 2018 have been adjusted to exclude a $5.3 million impairment loss related to the sale of one of our vessels and a $0.6 million equity compensation expense.
- (3) Adjusted EBITDA for the nine month period ended September 30, 2019 has been adjusted to exclude a $7.3 million impairment loss related to the sale of one of our vessels and a $3.6 million revision of the estimated guarantee claim receivable.
- (4) Adjusted Net Income and Adjusted Earnings per Common Unit for the nine month period ended September 30, 2019 have been adjusted to exclude a $7.3 million impairment loss related to the sale of one of our vessels, a $3.6 million revision of the estimated guarantee claim receivable and a $2.9 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility.
- (5) Adjusted Net Income and Adjusted Earnings per Common Unit for the nine month period ended September 30, 2018 have been adjusted to exclude a $43.1 million impairment loss related to the sale of three of our vessels, a $1.9 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.
- (6) Adjusted EBITDA for the nine month period ended September 30, 2018 has been adjusted to exclude a $43.1 million impairment loss related to the sale of three of our vessels and a $1.9 million equity compensation expense.
Three month periods ended September 30, 2019 and 2018
Time charter and voyage revenues for the three month period ended September 30, 2019 increased by $1.0 million, or 1.6%, to $63.5 million, as compared to $62.6 million for the same period in 2018. The increase in time charter and voyage revenues was mainly attributable to the increase in the time charter equivalent rate, or TCE rate, to $18,778 per day for the three month period ended September 30, 2019, from $17,606 per day for the three month period ended September 30, 2018 and the delivery of the Navios Libra in July 2019. That increase was partially mitigated by the decrease in revenue due to the sale of the Navios Felicity and the Navios Libra II in December 2018 and the Navios Galaxy I in April 2019. The available days of the fleet decreased to 3,240 days for the three month period ended September 30, 2019, as compared to 3,428 days for the three month period ended September 30, 2018, mainly due to the decrease of the size of the fleet.
EBITDA for the three month period ended September 30, 2018 was negatively affected by the accounting effect of a: (i) $5.3 million impairment loss on the sale of the Navios Felicity; and (ii) $0.6 million equity compensation expense. Excluding these items, Adjusted EBITDA decreased by $0.7 million to $41.3 million for the three month period ended September 30, 2019, as compared to $42.0 million for the same period in 2018. The decrease in Adjusted EBITDA was primarily due to a: (i) $0.5 million increase in time charter and voyage expenses; (ii) $1.0 million increase in general and administrative expenses; (iii) $0.6 million decrease in equity in net earnings of affiliated companies and (iv) $0.1 million decrease in other income. The above decrease was partially mitigated by a: (i) $1.0 million increase in revenue; and (ii) $0.5 million decrease in management fees.
The reserves for estimated maintenance and replacement capital expenditures for the three month periods ended September 30, 2019 and 2018 were $7.2 million and $7.4 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 September 30, 2019 of $25.7 million, as compared to $25.8 million for the three month period ended September 30, 2018. 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 for the three month period ended September 30, 2019 was negatively affected by the accounting effect of a: (i) $1.4 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the third quarter of 2019. Net Income of Navios Partners for the three month period ended September 30, 2018 was negatively affected by the accounting effect of a: (i) $5.3 million impairment loss on the sale of the Navios Felicity; and (ii) $0.6 million equity compensation expense. Excluding these items, Adjusted Net Income for the three month period ended September 30, 2019 amounted to $18.3 million compared to $16.3 million income for the three month period ended September 30, 2018. The increase in Adjusted Net Income of $1.9 million was due to a: (i) $1.4 million decrease in depreciation and amortization expense; (ii) $0.7 million increase in interest income and (iii) a $0.7 million decrease in interest expense and finance cost, net. The above increase was partially mitigated by a: (i) 0.7 million decrease in Adjusted EBITDA; and (ii) $0.2 million increase in direct vessel expenses.
Nine month periods ended September 30, 2019 and 2018
Time charter and voyage revenues for the nine month period ended September 30, 2019 decreased by $15.7 million, or 9.0%, to $158.1 million, as compared to $173.8 million for the same period in 2018. The decrease in time charter and voyage revenues was mainly attributable to: (i) the decrease in revenue due to the sales of the YM Unity and the YM Utmost in July 2018, the Navios Felicity and the Navios Libra II in December 2018 and the Navios Galaxy I in April 2019; and (ii) the decrease in the TCE rate, to $15,369 per day for the nine month period ended September 30, 2019, from $16,745 per day for the nine month period ended September 30, 2018. That decrease was partially mitigated by the increase in revenue following the acquisition of the Navios Mars and the Navios Sphera in August 2018, the Navios Apollon I, the Navios Prosperity I and the Navios Libertas in June 2018 and the delivery of the Navios Libra in July 2019. The available days of the fleet decreased to 9,720 days for the nine month period ended September 30, 2019, as compared to 9,980 days for the nine month period ended September 30, 2018.
EBITDA for the nine month period ended September 30, 2019 was negatively affected by the accounting effect of a: (i) $7.3 million impairment loss on the sale of the Navios Galaxy I; and (ii) $3.6 million revision of the estimated guarantee claim receivable. EBITDA for the nine month period ended September 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) $5.3 million impairment loss on the sale of the Navios Felicity; and (iii) $1.9 million equity compensation expense. Excluding these items, Adjusted EBITDA decreased by $21.8 million to $86.3 million for the nine month period ended September 30, 2019, as compared to $108.2 million for the same period in 2018. The decrease in Adjusted EBITDA was primarily due to a: (i) $15.7 million decrease in revenue; (ii) $2.0 million increase in time charter and voyage expenses; (iii) $3.8 million increase in general and administrative expenses; (iv) $3.1 million decrease in equity in net earnings of affiliated companies; and (v) $0.2 million decrease in other income. The above decrease was partially mitigated by a: (i) $1.5 million decrease in management fees; and (ii) $1.4 million decrease in other expenses.
The reserves for estimated maintenance and replacement capital expenditures for the nine month periods ended September 30, 2019 and 2018 were $21.9 million and $19.8 million, respectively (please see “Reconciliation of Non-GAAP Financial Measures” in Exhibit 3).
Navios Partners generated an operating surplus for the nine month period ended September 30, 2019 of $37.6 million, as compared to $63.0 million for the nine month period ended September 30, 2018. 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 for the nine month period ended September 30, 2019 was negatively affected by the accounting effect of a: (i) $7.3 million impairment loss on the sale of the Navios Galaxy I; (ii) $3.6 million revision of the estimated guarantee claim receivable; and (iii) $2.9 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the nine month period ended September 30, 2019. Net loss for the nine month period ended September 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) $5.3 million impairment loss on the sale of the Navios Felicity; (iii) $1.9 million equity compensation expense; and (iv) $0.2 million write-off of deferred finance fees. Excluding these items, Adjusted Net Income / Loss for the nine month period ended September 30, 2019 amounted to $14.7 million compared to $31.6 million for the nine month period ended September 30, 2018. The decrease in Adjusted Net Income of $16.9 million was due to a: (i) $21.8 million decrease in adjusted EBITDA; (ii) $1.1 million increase in interest expense and finance cost, net and (iii) $0.1 million increase in direct vessel expenses. The above decrease was partially mitigated by a: (i) $3.9 million decrease in depreciation and amortization expense; and (ii) $2.3 million increase in interest income.
Fleet Employment Profile
The following table reflects certain key indicators of Navios Partners’ core fleet performance for the three and nine month periods ended September 30, 2019 and 2018.
About Navios Maritime Partners L.P.
Navios Maritime Partners L.P. (NYSE: NMM) is a publicly traded master limited partnership which owns and operates dry cargo vessels. For more information, please visit our website at www.navios-mlp.com.
