Navios Maritime Reports Q4 Results; Frangou: Dry Bulk Market Weakness To Persist

Angeliki Frangou

Navios Maritime Holdings reported financial results for the fourth quarter and year ended December 31, 2019.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results of the fourth quarter and full year of 2019. For the fourth quarter of 2019, we reported revenue of $118.9 million and Adjusted EBITDA of $74.7 million. For the full year of 2019, we reported revenue of $482.4 million and Adjusted EBITDA of $303.8 million.”

Angeliki Frangou continued, “Charter rates in the drybulk market are depressed due to seasonality and uncertainty related to the coronavirus. We anticipate continued weakness for the first half of 2020, with growth accelerating in the second half of the year as China returns more fully to the global market.”

HIGHLIGHTS – RECENT DEVELOPMENTS

Agreement to Liquidate Navios Europe Inc.

On November 22, 2019, an agreement was reached to liquidate Navios Europe Inc. (“Navios Europe I”). As a result of this liquidation, Navios Holdings received the outstanding receivable amount of $13.4 million, in December 2019.

Fleet Update

Acquisition of two Capesize vessels

In January 2020, the Company acquired from an unrelated third party, a previously chartered-in vessel, the Dream Canary, a 2015-built, 180,528 dwt vessel, for a total acquisition price of $34.9 million, which was paid in cash. The acquisition was financed through a sale and leaseback transaction with unrelated third party. The sale and leaseback transaction has (a) an average amortization profile of approximately 16.2 years on an age-adjusted basis, (b) annual interest of LIBOR plus an estimated effective interest rate of 316 bps and (c) a term of 12 years.

In February 2020, the Company agreed to acquire Dream Coral, a 2015-built, 181,249 dwt chartered-in vessel for an estimated purchase price ranging from $36.5 million to $36.7 million depending on the actual delivery date. The acquisition is expected to be completed in the first quarter of 2020 and will be financed through a sale and leaseback transaction with unrelated third party. The sale and leaseback transaction has (a) an average amortization profile of approximately 16.6 years on an age-adjusted basis, (b) annual interest of LIBOR plus an estimated effective interest rate of 311 bps and (c) a term of 12 years.

Delivery of two Kamsarmax vessels

In November 2019, the Company took delivery of the Navios Uranus, a newbuilt bareboat chartered-in Kamsarmax of 81,516 dwt.

In January 2020, the Company took delivery of the Navios Felicity I, a newbuilt bareboat chartered-in Kamsarmax of 81,946 dwt.

Sale of three vessels

In January and February, 2020, Navios Holdings sold three vessels, the Navios Hios, a 2003-built Ultra Handymax vessel of 55,180 dwt, the Navios Kypros, a 2003-built Ultra Handymax vessel of 55,222 dwt, and the Navios Star, a 2002-built Panamax vessel of 76,662 dwt to unrelated third parties. Gross proceeds are expected to be $23.6 million, including insurance proceeds covering unrepaired damages plus expenses (subject to applicable deductibles and other customary limitations). The Navios Hios and the Navios Kypros have already been delivered to the buyers and the Navios Star is expected to be delivered in the second quarter of 2020.

Debt Update

In December 2019, the Navios Logistics Secured Loan facility was increased by $20.0 million, with the additional principal amount used to repurchase the Ship Mortgage Notes (“the 2022 Notes”). As of December 31, 2019, $69.3 million was drawn under this facility, and all the 2022 Notes that have been repurchased under this facility have been pledged as collateral to this facility.

Fleet statistics

Navios Holdings controls a fleet of 53 vessels (including one vessel agreed to be sold) totaling 5.7 million dwt, of which 35 are owned (including 5 bareboat-in vessels) and 18 are chartered-in under long-term charters (collectively, the “Core Fleet”). The fleet consists of 17 Capesize, 28 Panamax, six Ultra-Handymax and two Handysize vessels, with an average age of 7.5 years, basis fully delivered fleet.

As of February 3, 2020, Navios Holdings has chartered-out 76.8% of available days of 2020. Of these available days, 18.9% are chartered-out on fixed rate and 57.9% are chartered-out on index. The average contracted daily charter-in rate for the long-term charter-in vessels is $13,451 per day.

The above figures do not include the fleets of Navios South American Logistics Inc. (“Navios Logistics”) and vessels servicing contracts of affreightment.

Exhibit II provides certain details of the Core Fleet of Navios Holdings. It does not include the fleets of Navios Logistics.

Earnings Highlights

EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) attributable to Navios Holdings’ common stockholders and Adjusted Basic Earnings/(Loss) attributable to Navios Holdings’ common stockholders 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.

See Exhibit I under the heading, “Disclosure of Non-GAAP Financial Measures,” for a discussion of EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) attributable to Navios Holdings’ common stockholders and Adjusted Basic Earnings/(Loss) attributable to Navios Holdings’ common stockholders per share of Navios Holdings (including Navios Logistics and Navios Containers), and EBITDA of Navios Logistics and Navios Containers (both on a stand-alone basis) and a reconciliation of such measures to the most comparable measures calculated under U.S. GAAP.

As of November 30, 2018, Navios Holdings obtained control over Navios Containers and consequently consolidated Navios Containers from that date onwards. Following the sale of Navios Containers general partnership interest effected on August 30, 2019, Navios Holdings deconsolidated Navios Containers from that date onwards. The results of operations of Navios Containers for the periods from January 1, 2019 to August 30, 2019 and from November 30, 2018 to December 31, 2018 consolidated under Navios Holdings, have been reported as discontinued operations for all periods presented.

Revenue from dry bulk vessel operations for the three month period ended December 31, 2019 decreased by $4.8 million, or 6.3%, to $71.1 million, as compared to $75.9 million for the same period during 2018. The decrease in dry bulk revenue was mainly attributable to a decrease in available days by 18.8%, due to the vessels sold and certain charter-in vessels that were redelivered, partially mitigated by an increase in TCE per day by 14.3% to $14,894 per day in the three month period ended December 31, 2019 as compared to $13,033 per day in the same period in 2018.

Revenue from the logistics business was $47.8 million for the three month period ended December 31, 2019 as compared to $39.4 million for the same period in 2018. The increase was mainly attributable to (i) a $14.6 million increase in revenue from the port terminal business mainly due to higher volumes transshipped in the grain port terminal as well as higher revenue in the iron ore port terminal compared to the three month period ended December 31, 2018 as iron ore port terminal operations were partially interrupted from a fire incident in 2018, and (ii) a $3.8 million increase in revenue from the barge business mainly due to higher volumes of liquid and dry cargo transported. The overall increase was partially mitigated by (i) a $8.6 million decrease in sales of products mainly due to a decrease in the Paraguayan liquid port’s volumes of products sold, and (ii) a $1.4 million decrease in revenue from the cabotage business mainly due to less spot trips performed.

Revenue of Navios Containers for the period from November 30, 2018 (date of obtaining control) to December 31, 2018 was $12.1 million.

Net Loss attributable to Navios Holdings’ common stockholders was $111.2 million for the three month period ended December 31, 2019, as compared to $200.8 million Net Loss attributable to Navios Holdings’ common stockholders for the same period in 2018. Net Loss attributable to Navios Holdings’ common stockholders was affected by items described in the table above. Excluding these items, Adjusted Net Income attributable to Navios Holdings’ common stockholders for the three month period ended December 31, 2019 was $19.4 million, as compared to $19.7 million Adjusted Net Loss attributable to Navios Holdings’ common stockholders for the same period in 2018. This increase in Adjusted Net Income was mainly due to (i) a $33.5 million increase in Adjusted EBITDA (excluding $4.3 million of Adjusted EBITDA incurred in the fourth quarter ended December 31, 2018 from consolidating Navios Containers); (ii) a $4.9 million decrease in depreciation and amortization from continuing operations; (iii) a $0.4 million decrease in share-based compensation expense; (iv) a $0.4 million decrease in amortization for deferred drydock and special survey costs from continuing operations and (v) $0.7 million of minority interest of Navios Containers for the period from November 30, 2018 to December 31, 2018. This overall increase of $39.9 million was partially mitigated by (i) a $0.4 million increase in interest expense and finance cost, net from continuing operations and (ii) a $0.4 million increase in income tax expense from continuing operations.

Net Income of Navios Logistics, on a standalone basis, was $2.8 million for the three month period ended December 31, 2019 as compared to $2.8 million of Net Loss for the same period in 2018.

Net Income of Navios Containers, on a standalone basis, was $0.8 million for the period from November 30, 2018 (date of obtaining control) to December 31, 2018.

Adjusted EBITDA of Navios Holdings for the three month period ended December 31, 2019 increased by $29.2 million to $74.7 million, as compared to $45.5 million for the same period in 2018. The increase in Adjusted EBITDA was primarily due to (i) a $21.7 million increase in equity in net earnings from affiliated companies, (ii) a $13.7 million gain on bond extinguishment, (iii) a $10.9 million decrease in time charter, voyage and logistics business expenses from continuing operations and $0.5 million time charter, voyage and logistics business expenses of Navios Containers for the period from November 30, 2018 to December 31, 2018, (iv) $5.3 million direct vessel expenses of Navios Containers (excluding the amortization of deferred drydock and special survey costs) for the period from November 30, 2018 to December 31, 2018, (v) a $3.6 million increase in revenue from continuing operations, (vi) $0.9 million general and administrative expenses of Navios Containers for the period from November 30, 2018 to December 31, 2018 and (vii) $0.3 million other expense, net of Navios Containers for the period from November 30, 2018 to December 31, 2018. This overall increase of $56.9 million was partially mitigated by (i) $12.1 million revenue of Navios Containers for the period from November 30, 2018 to December 31, 2018, (ii) a $2.9 million increase in direct vessel expenses from continuing operations (excluding the amortization of deferred drydock and special survey costs), (iii) a $6.0 million increase in general and administrative expenses (excluding share-based compensation expenses) from continuing operations, (iv) a $5.4 million decrease in other income from continuing operations and (v) a $1.3 million increase in net income attributable to noncontrolling interest. Excluding Navios Containers for the consolidated period from November 30, 2018 to December 31, 2018 of $4.3 million, the increase in Adjusted EBITDA was $33.5 million.

EBITDA of Navios Logistics, on a standalone basis, was $19.8 million for the three month period ended December 31, 2019, as compared to $16.4 million for the same period in 2018.

Revenue from dry bulk vessel operations for the year ended December 31, 2019 decreased by $43.8 million, or 14.7%, to $254.2 million, as compared to $298.0 million for the same period in 2018. The decrease in dry bulk revenue was mainly attributable to a decrease in available days by 14.0%, due to the vessels sold and certain charter-in vessels that were redelivered. The TCE per day amounted to $12,519 per day in the year ended December 31, 2019 as compared to $12,534 per day in the same period in 2018.

Revenue from the logistics business was $228.3 million for the year ended December 31, 2019 as compared to $207.6 million for the same period in 2018. The increase was mainly attributable to (i) a $25.9 million increase in revenue from the port terminal business mainly due to higher volumes transshipped in the grain port terminal as well as higher revenue in the iron ore port terminal compared to the year ended December 31, 2018 as iron ore port terminal operations were partially interrupted from a fire incident in 2018, (ii) a $13.5 million increase in revenue from the barge business mainly due to higher volumes of liquid and dry cargo transported, and (iii) a $4.4 million increase in revenue from the cabotage business mainly due to more operating days of the cabotage fleet. The overall increase was partially mitigated by a $23.1 million decrease in sales of products mainly due to a decrease in the Paraguayan liquid port’s volumes of products sold.

Revenue of Navios Containers for the period from January 1, 2019 to August 30, 2019 (deconsolidation effective date) was $89.9 million, as compared to $12.1 million for the period from November 30, 2018 to December 31, 2018 and consisted of time charter revenues.

Net Loss of Navios Holdings was $192.1 million for year ended December 31, 2019, as compared to $268.7 million Net Loss for the same period in 2018. Net Loss was affected by items described in the table above. Excluding these items, Adjusted Net Income of Navios Holdings for the year ended December 31, 2019 was $53.9 million, as compared to $71.6 million Adjusted Net Loss attributable to Navios Holdings’ common stockholders for the same period in 2018. The $125.5 million increase in Adjusted Net Income was mainly due to (i) an increase in Adjusted EBITDA of $94.6 million (excluding $29.6 million increase of Adjusted Ebitda of Navios Containers incurred for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018); (ii) a decrease of $2.7 million in amortization for deferred drydock and special survey costs from continuing operations; (iii) a $1.7 million decrease in share-based compensation expense; (iv) a decrease in depreciation and amortization from continuing operations of $18.1 million; (v) a decrease in interest expense and finance cost, net from continuing operations of $6.4 million; and (vi) a $4.7 increase in minority interest of Navios Containers for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018. This overall increase in Adjusted Net Income was partially mitigated by an increase in income tax expense of $2.7 million from continuing operations.

Net Income of Navios Logistics, on a standalone basis, was $32.1 million for the year ended December 31, 2019, as compared to $6.9 million for the same period in 2018.

Net Loss of Navios Containers, on a standalone basis, was $4.1 million for the period from January 1, 2019 to August 30, 2019 (deconsolidation effective date), as compared to $0.8 million for the period from November 30, 2018 (date of gaining control) to December 31, 2018.

Adjusted EBITDA of Navios Holdings for the year ended December 31, 2019 increased by $124.2 million to $303.8 million, as compared to $179.6 million for the same period in 2018. The $124.2 million increase in Adjusted EBITDA was primarily due to (i) a $77.8 million increase in revenue of Navios Containers for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018; (ii) a $40.9 million increase in bond extinguishment gains; (iii) a $27.3 million increase in other income, net from continuing operations; (iv) a $28.6 million decrease in time charter, voyage and logistics business expenses from continuing operations; (v) a $9.8 million gain on sale of business recorded in the year ended December 31, 2019; and (vi) a $39.6 million increase in equity in net earnings from affiliated companies. This overall increase of $224.0 million was partially mitigated by (i) a $23.3 million decrease in revenue from continuing operations; (ii) a $7.6 million increase in direct vessel expenses from continuing operations (excluding the amortization of deferred drydock and special survey costs) and a $38.2 million increase in direct vessel expenses of Navios Containers (excluding the amortization of deferred drydock and special survey costs) for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018; (iii) a $11.3 million increase in general and administrative expenses (excluding share-based compensation expenses) from continuing operations and a $5.8 million increase in general and administrative expenses of Navios Containers for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018; (iv) a $4.5 million increase in net income attributable to the non-controlling interest; (v) a $3.5 million increase in time charter and voyage expenses of Navios Containers for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018; and (vi) a $5.6 million increase in other expense, net of Navios Containers for the period from January 1, 2019 to August 30, 2019, as compared to the period from November 30, 2018 to December 31, 2018. Excluding the increase of $29.6 million of Navios Containers for the consolidated periods from January 1, 2019 to August 30, 2019 and from November 30, 2018 to December 31, 2018 the increase in Adjusted EBITDA was $94.6 million.

EBITDA of Navios Logistics, on a standalone basis, was $103.9 million for the year ended December 31, 2019, as compared to $81.1 million for the same period in 2018.

LEAVE A COMMENT

×

Comments are closed.