Navios Holdings loss widens despite higher revenue

Navios-NYSE

Navios Maritime Holdings Inc., a global, vertically integrated seaborne shipping and logistics company, reported financial results for the third quarter and nine months ended September 30, 2017.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am very pleased with our results for the third quarter of 2017, for which we reported revenues of $120.6 million and adjusted EBITDA of $31.2 million.”

Angeliki Frangou continued: “On November 14, 2017, we successfully refinanced the 8.125% Senior Unsecured Notes that were maturing in 15 months, with $305.0 million of 11.25% Senior Secured Notes. The new notes are callable at any time which provides the flexibility to refinance these new notes as the dry bulk market and our financial performance improve.”

HIGHLIGHTS – RECENT DEVELOPMENTS

Successfully Refinanced the 2019 Maturity

On November 14, 2017, Navios Holdings announced the pricing of $305.0 million 11.25% Senior Secured Notes due 2022 (the “Notes”). The Notes will be secured by a first priority lien on the capital stock owned by certain of the subsidiary guarantors of Navios Holdings in each of Navios Maritime Partners L.P. (“Navios Partners”), Navios GP L.L.C., Navios Maritime Acquisition Corporation (“Navios Acquisition”), Navios South American Logistics Inc. (“Navios Logistics”) and Navios Maritime Containers Inc. The Notes will be guaranteed by all of the Company’s direct and indirect subsidiaries, except for certain subsidiaries designated as unrestricted subsidiaries, including Navios Logistics. The net proceeds of the offering will be used to complete a cash tender offer for any and all of Company’s outstanding 8 1⁄8% Senior Notes due 2019 and to redeem any and all such notes that are not purchased in the tender offer after all conditions to the tender offer are satisfied or waived, including the payment of related fees and expenses and any redemption premium, with any remaining proceeds to be used for general corporate purposes.

Other debt developments

On November 3, 2017, Navios Holdings prepaid in full the total outstanding amount borrowed under its secured loan facility with Navios Acquisition of up to $70.0 million entered into in September 2016 with a payment of $55.1 million and extinguished the secured loan facility. The prepayment amount consisted of the $50.0 million drawn under the facility and $5.1 million of accrued interest.

On November 1, 2017, Navios Holdings agreed to extend $18.3 million outstanding balance under one of its secured credit facilities originally due by September 2018 for three years to September 2021.

Navios Logistics

On November 3, 2017, Navios Logistics completed the borrowing of a new $100.0 million Term Loan B (the “Term Loan B”). The Term Loan B bears an interest rate of LIBOR plus 475 basis points and has a four year term with 1.0% amortization per annum. The Term Loan B is secured by first priority mortgages covering certain vessels owned by subsidiaries of Navios Logistics, as well as by assignments of certain receivables. Navios Logistics used $70.0 million of the proceeds of the Term Loan B to finance a cash dividend to its equity holders, of which Navios Holdings received $44.7 million. Navios Logistics intends to use the remaining proceeds of the Term Loan B: (i) for general corporate purposes and (ii) to pay fees and expenses relating to the Term Loan B.

Fleet update

Navios Holdings controls a fleet of 64 operating vessels totaling 6.6 million dwt, of which 38 are owned and 26 are chartered-in under long-term charters (collectively, the “Core Fleet”). The fleet consists of 21 Capesize, 23 Panamax, 18 Ultra Handymax and two Handysize vessels with an average age of 8.3 years.

As of November 1, 2017, Navios Holdings has chartered-out 66.6% and 11.2% of available days for the remaining three months of 2017 and 2018, respectively (excluding index and profit sharing days). The average contracted daily charter-in rate for the long-term charter-in vessels for the remaining three months of 2017 is $12,521.

The above figures do not include the fleet of Navios Logistics and vessels servicing contracts of affreightment.

Earnings Highlights

EBITDA, Adjusted EBITDA, Adjusted Net Loss and Adjusted Basic Loss per Share are non-U.S. GAAP financial measures and should not be used in isolation or as substitution for Navios Holdings’ results calculated in accordance with U.S. GAAP.

Revenue from dry bulk vessel operations for the three months ended September 30, 2017 was $61.0 million as compared to $49.7 million for the same period during 2016. The increase in dry bulk revenue was mainly attributable to (i) the increase in the time charter equivalent (“TCE”) per day by 5.2% to $9,481 per day in the third quarter of 2017, as compared to $9,010 per day in the same period of 2016; and (ii) an increase in available days of our fleet by 579 days, mainly due to an increase in long-term charter-in fleet available days.

Revenue from the logistics business was $59.6 million for the three months ended September 30, 2017 as compared to $63.4 million for the same period in 2016. The decrease was mainly attributable to (i) a $6.4 million decrease in revenue from the barge business mainly due to the expiration of certain iron ore transportation contracts; and (ii) a $0.6 million decrease in revenue from the cabotage business mainly due to the less operating days. The overall decrease was partially mitigated by a $3.2 million increase in revenue from the port terminal business mainly due to the increase in the volume and tariffs in the dry port terminal and to the commencement of operations at the new iron ore terminal.

Net Loss of Navios Holdings was $28.3 million and $27.5 million for the three months ended September 30, 2017 and 2016, respectively. Net Loss was affected by the items described in the table above. Excluding these items, Adjusted Net Loss of Navios Holdings for the three months ended September 30, 2017 was $28.3 million as compared to $22.4 million for the same period of 2016. The $5.9 million increase in Adjusted Net Loss was mainly due to (i) a decrease in Adjusted EBITDA by $7.3 million; (ii) an increase in interest expense and finance cost, net by $2.0 million; (iii) an increase in share-based compensation expense of $0.2 million; and (iv) an increase in amortization for deferred drydock and special survey costs of $0.1 million. This overall decrease of $9.6 million was partially mitigated by (i) a decrease in depreciation and amortization by $2.2 million; and (ii) a decrease in income tax expense of $1.5 million.

Net income of Navios Logistics was $1.8 million for the three month period ended September 30, 2017 as compared to $2.8 million for the same period in 2016.

Adjusted EBITDA of Navios Holdings for the three months ended September 30, 2017 decreased by $7.3 million to $31.2 million as compared to $38.5 million for the same period of 2016. The $7.3 million decrease in Adjusted EBITDA was primarily due to (i) a $15.0 million increase in time charter, voyage and logistics business expenses; (ii) a $6.5 million decrease in equity in net earnings from affiliated companies; and (iii) a $0.3 million increase in general and administrative expenses (excluding share-based compensation expenses). This overall decrease of $21.8 million was partially mitigated by (i) a $7.5 million increase in revenue; (ii) a $4.8 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $1.9 million decrease in other expense, net; and (iv) a $0.3 million decrease in net income attributable to noncontrolling interest.

EBITDA of Navios Logistics was $18.2 million for the three month period ended September 30, 2017, as compared to $19.1 million for the same period in 2016.

Revenue from dry bulk vessel operations for the nine months ended September 30, 2017 was $171.8 million as compared to $142.9 million for the same period during 2016. The increase in dry bulk revenue was mainly attributable to (i) the increase in TCE per day by 9.1% to $8,836 per day in the nine month period ended September 30, 2017 as compared to $8,102 per day in the same period in 2016; and (ii) an increase in available days of our fleet by 1,191 days, mainly due to an increase in long-term charter-in fleet available days.

Revenue from the logistics business was $162.8 million for the nine months ended September 30, 2017 as compared to $177.4 million for the same period in 2016. The decrease was mainly attributable to (i) an $18.0 million decrease in revenue from barge business mainly due to the expiration of certain iron ore transportation contracts; and (ii) a $5.9 million decrease in revenue from the cabotage business mainly due to a decrease in operating days of the cabotage fleet. The overall decrease was partially mitigated by (i) a $5.5 million increase in revenue due to an increase in tariffs in the dry port terminal business and the commencement of operations at the new iron ore terminal; and (ii) a $3.8 million increase in sales of products mainly due to an increase in the Paraguayan liquid port’s volume of products sold.

Net Loss of Navios Holdings was $114.3 million and $61.4 million for the nine months ended September 30, 2017 and 2016, respectively. Net Loss was affected by the items described in the table above. Excluding these items, Adjusted Net Loss of Navios Holdings for the nine months ended September 30, 2017 was $95.4 million as compared to $78.5 million for the same period of 2016. The $16.9 million increase in Adjusted Net Loss was mainly due to (i) a decrease in Adjusted EBITDA of $20.0 million; (ii) an increase in interest expense and finance cost, net of $2.5 million; (iii) an increase of $0.9 million in amortization for deferred drydock and special survey costs; and (iv) an increase of $0.7 million in share-based compensation expense. This overall increase of $24.1 million was partially mitigated by (i) a decrease in depreciation and amortization of $4.8 million; and (ii) a decrease in income tax expense of $2.4 million.

Net Income of Navios Logistics was $3.3 million for the nine month period ended September 30, 2017, as compared to $15.8 million for the same period in 2016.

Adjusted EBITDA of Navios Holdings for the nine month period ended September 30, 2017 decreased by $20.0 million to $80.1 million as compared to $100.1 million for the same period of 2016. The $20.0 million decrease in Adjusted EBITDA was primarily due to (i) a $37.3 million increase in time charter, voyage and logistics business expenses; and (ii) a $16.7 million decrease in equity in net earnings from affiliated companies. This overall decrease of $54.0 million was partially mitigated by (i) a $14.2 million increase in revenue; (ii) a $8.3 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $4.5 million decrease in net income attributable to the noncontrolling interest; (iv) a $3.7 million decrease in other expense, net; (v) a $1.7 million gain on debt extinguishment; (vi) a $1.1 million gain on sale of assets; and (vii) a $0.5 million decrease in general and administrative expenses (excluding share-based compensation expenses).

EBITDA of Navios Logistics was $47.5 million for the nine month period ended September 30, 2017, as compared to $60.9 million for the same period in 2016.

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