Navios Maritime Partners maintains dividend amid coronavirus pandemic

Angeliki Frangou

Navios Maritime Partners L.P., an international owner and operator of dry cargo vessels, reported its financial results for the first quarter ended March 31, 2020.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “While the humanitarian crises caused by the Pandemic has been heartbreaking, we have also been strengthened by the courage and compassion of the first responders, particularly the many dedicated health care workers. At any given time, our vessels carry over 1,000 people. Keeping these people safe and these vessels moving in and out of quarantined countries, with ever-changing rules and challenges, requires the immediate input of many disciplines. I am proud of the members of the Navios family as they have shown admirable resilience during this unprecedented time of uncertainty, and we have taken the necessary measures to ensure safety of our people while keeping our fleet functioning.”

Angeliki Frangou continued, “I am pleased with the results for the first quarter of 2020. For the first quarter, Navios Partners reported $46.5 million in revenue and $19.1 million in Adjusted EBITDA. We also declared a quarterly distribution of $0.30 cents per unit. The pandemic’s effect on global economic activity is evident in charter rates. So far this year, the capesize 5TC rate is averaging around $5,300 per day, which is 70% less than the 2019 average of $18,000. We are, however, expecting a recovery in the second half of 2020 as countries emerge from quarantine.”

Liquidation of Navios Europe II Inc.

On April 21, 2020, Navios Europe II agreed with the lender to fully release the liabilities under the junior participating loan facility for $5.0 million. Navios Europe II owns seven container vessels and seven dry bulk vessels. The structure is expected to be liquidated during the second quarter of 2020 and Navios Partners expects to receive cash and steel value. The Company’s Conflict Committee will consider and approve the liquidation.

Cash Distribution

The Board of Directors of Navios Partners declared a cash distribution for the first quarter of 2020 of $0.30 per unit. The cash distribution is payable on May 14, 2020 to all unitholders of record as of May 11, 2020. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

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 84.6% of its available days for 2020, 36.9% for 2021 and 16.3% for 2022, including index-linked charters, expecting to generate revenues (excluding index-linked charters) of approximately $143.6 million, $83.3 million and $71.9 million, respectively. The average contracted daily charter-out rate for the fleet is $13,878, $27,001 and $28,632 for 2020, 2021 and 2022, respectively.

Three month periods ended March 31, 2020 and 2019

Time charter and voyage revenues for the three month period ended March 31, 2020 decreased by $0.3 million, or 0.7%, to $46.5 million, as compared to $46.8 million for the same period in 2019. The decrease in time charter and voyage revenues was mainly attributable to the decrease in the time charter equivalent rate, or TCE rate, to $10,717 per day for the three month period ended March 31, 2020, from $13,209 per day for the three month period ended March 31, 2019. The available days of the fleet increased to 4,097 days for the three month period ended March 31, 2020, as compared to 3,277 days for the three month period ended March 31, 2019.

EBITDA for the three month period ended March 31, 2020 was negatively affected by the accounting effect of a $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II. EBITDA for the three month period ended March 31, 2019 was negatively affected by the accounting effect of a $7.3 million impairment loss on the sale of the Navios Galaxy I. Excluding these items, Adjusted EBITDA decreased by $3.6 million to $19.1 million for the three month period ended March 31, 2020, as compared to $22.7 million for the same period in 2019. The decrease in Adjusted EBITDA was primarily due to a: (i) $0.3 million decrease in revenue; (ii) $5.6 million increase in management fees; (iii) $0.1 million increase in general and administrative fees; and (iv) $0.3 million increase in other expense. The above decrease was partially mitigated by a: (i) $0.4 million decrease in time charter and voyage expenses; (ii) $0.7 million increase in other income; and (iii) $1.7 million increase in equity in net earnings of affiliated companies.

The reserves for estimated maintenance and replacement capital expenditures for the three month periods ended March 31, 2020 and 2019 were $8.6 million and $7.5 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 March 31, 2020 of $4.4 million, as compared to $5.7 million for the three month period ended March 31, 2019. 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 Loss for the three month period ended March 31, 2020 was negatively affected by the accounting effect of a $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II. Net Loss for the three month period ended March 31, 2019 was negatively affected by the accounting effect of a $7.3 million impairment loss on the sale of the Navios Galaxy I. Excluding these items, Adjusted Net Loss for the three month period ended March 31, 2020 amounted to $3.8 million compared to $2.2 million loss for the three month period ended March 31, 2019. The increase in Adjusted Net Loss of $1.6 million was due to a: (i) $3.6 million decrease in Adjusted EBITDA; (ii) $1.0 million increase in direct vessel expenses; (iii) $0.1 million increase in depreciation and amortization expenses; and (iv) $1.5 million decrease in interest income. The above increase was partially mitigated by a $4.6 million decrease in interest expense and finance cost, net.

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