Navios Partners reveals more than $199m in new financing deals

Navios_Partners

Navios Maritime Partners L.P., an international owner and operator of dry cargo vessels, reported its financial results for the fourth quarter and year ended December 31, 2018.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “I am pleased with our results. Navios Partners reported $139.1 million of adjusted EBITDA and $36.7 million of adjusted net income for 2018, of which $31.0 million of adjusted EBITDA and $5.1 million of adjusted net income was reported in the fourth quarter of 2018.”

Angeliki Frangou continued, “NMM owns 38 vessels, and the TCE rate for our drybulk fleet was 18% higher in 2018 than 2017. We declared a quarterly distribution of $0.02 cents per unit for the fourth quarter, representing a current yield of approximately 8.0%.

We also continue to leverage the weakness in the container sector through our 33.5% interest in Navios Containers. Today, Navios Containers owns 30 containerships, trades on NASDAQ and has an enviable balance sheet and competitive position.”

Returning Capital to Unitholders

Unit Repurchase Program

In January 2019, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $50.0 million of the Company’s common units over a two year period. Common unit repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of repurchases under the program will be determined by Navios Partners’ management based upon market conditions and other factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not require any minimum repurchase or any specific number of common units and may be suspended or reinstated at any time in the Company’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject to restrictions under the Company’s credit facilities.

Distributions

Cash Distribution

The Board of Directors of Navios Partners declared a cash distribution for the fourth quarter of 2018 of $0.02 per unit. The cash distribution is payable on February 14, 2019 to all unitholders of record as of February 11, 2019.

$4.2 million Distribution in kind

In December 2018, Navios Partners distributed 855 thousands units of Navios Maritime Containers L.P. (“Navios Containers”) to the unitholders of Navios Partners (approximately 2.5% of the outstanding equity). The amount of the distribution was $4.2 million based on the last trading price of Navios Containers’ shares in N-OTC as of November 23, 2018. Following this distribution, Navios Partners owns approximately 33.5% of the equity in Navios Containers.

Financing Arrangements

$174.3 million of agreements with four banks for refinancing of twelve vessels

In December 2018, Navios Partners entered into agreements with four banks, for a total amount of $174.3 million for refinancing of eight Capesize, one Panamax and three Ultra-Handymax vessels. The agreements have a weighted average term of 5.3 years and bear an average interest rate of LIBOR plus 270 basis points (“bps”) per annum. Amortization profiles of the four facilities range between 15.2 and 18.0 years on an age adjusted basis. The above facilities are subject to signing of definitive documentation.

Sale and Leaseback Transaction

In December 2018, Navios Partners entered into a $25.0 million sale and leaseback transaction with unrelated third parties, for the Navios Fantastiks, a 2005-built Capesize vessel and the Navios Beaufiks, a 2004-built Capesize vessel. The sale and leaseback has an average term of 5.4 years and an age adjusted amortization profile of approximately 25 years. The bareboat lease provides an average daily payment of $5,200 per vessel. This results at an implied fixed interest rate of 7.6%. Navios Partners has the option to buy the vessels starting at the end of year three which de-escalates until maturity to $6.3 million per vessel. The purchase obligation at maturity of $6.3 million per vessel is lower than the scrap value of the vessels. This financing structure has no financial covenants and no loan-to-value requirements.

Fleet Update

Sale of Navios Felicity and Navios Libra II

In December 2018, the Company completed the sale of the Navios Felicity, a 1997-built Panamax vessel of 73,867 dwt and the Navios Libra II, a 1995-built Panamax vessel of 70,136 dwt, to unrelated third parties, for net sale prices of $4.7 million and $4.6 million, respectively. The average age of the two vessels was 23 years. The Company has recognized a book loss from the sale of the two vessels of $6.5 million, of which $1.2 million has been included in the fourth quarter of 2018.

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 2.2 years. Navios Partners has currently contracted out 68.1% of its available days for 2019, 32.9% for 2020 and 21.7% for 2021, including index-linked charters, expecting to generate revenues (excluding index-linked charters) of approximately $97.7 million, $82.4 million and $80.8 million, respectively. The average expected daily charter-out rate for the fleet is $19,826, $27,604 and $27,684 for 2019, 2020 and 2021, respectively.

Three month periods ended December 31, 2018 and 2017

Time charter and voyage revenues for Navios Partners for the three month period ended December 31, 2018 decreased by $1.7 million, or 2.9%, to $57.5 million, as compared to $59.3 million for the same period in 2017. The decrease in time charter and voyage revenues was mainly attributable to: (i) the decrease in revenue due to the sales of the Navios Gemini S in December 2017, the YM Unity and the YM Utmost in July 2018 and the Navios Felicity and the Navios Libra II in December 2018; and (ii) the decrease in the time charter equivalent rate, or TCE rate, to $15,632 per day for the three month period ended December 31, 2018, from $17,160 per day for the three month period ended December 31, 2017. That decrease was partially mitigated by the increase in revenue following the acquisition of seven vessels in 2017 and five vessels in 2018. The available days of the fleet increased to 3,469 days for the three month period ended December 31, 2018, as compared to 3,376 days for the three month period ended December 31, 2017, mainly due to the increased size of the fleet.

EBITDA of Navios Partners for the three month period ended December 31, 2018 was negatively affected by the accounting effect of a: (i) $1.2 million impairment loss on the sale of the Navios Libra II; (ii) $0.6 million equity compensation expense; (iii) $0.6 million other than temporary impairment on dividend in kind; and (iv) $2.0 million write down of a guarantee claim receivable. EBITDA of Navios Partners for the three month period ended December 31, 2017 was negatively affected by the accounting effect of a: (i) $30.3 million impairment loss on the Navios Hope; (ii) $2.4 million impairment loss on the sale of the Navios Gemini S; and (iii) $0.5 million equity compensation expense. Excluding these items, Adjusted EBITDA decreased by $6.1 million to $31.0 million for the three month period ended December 31, 2018, as compared to $37.1 million for the same period in 2017. The decrease in Adjusted EBITDA was primarily due to a: (i) $1.7 million decrease in revenue; (ii) $2.0 million increase in time charter and voyage expenses; (iii) $0.4 million increase in management fees; (iv) $0.6 million increase in general and administrative expenses; (v) $0.6 million increase in other expenses; and (vi) $0.9 million decrease in equity in net earnings of affiliated companies.

The reserves for estimated maintenance and replacement capital expenditures for the three month periods ended December 31, 2018 and 2017 were $7.0 million and $4.1 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 December 31, 2018 of $14.8 million, as compared to $25.5 million for the three month period ended December 31, 2017. 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 of Navios Partners for the three month period ended December 31, 2018 was negatively affected by the accounting effect of a: (i) $1.2 million impairment loss on the sale of the Navios Libra II; (ii) $0.6 million equity compensation expense; (iii) $0.6 million other than temporary impairment on dividend in kind; (iv) $0.2 million write-off of deferred finance fees; and (v) $2.0 million write down of a guarantee claim receivable. Net Income of Navios Partners for the three month period ended December 31, 2017 was negatively affected by the accounting effect of a: (i) $30.3 million impairment loss on the Navios Hope; (ii) $2.4 million impairment loss on the sale of the Navios Gemini S; and (iii) $0.5 million equity compensation expense. Excluding these items, Adjusted Net Income for the three month period ended December 31, 2018 amounted to $5.1 million compared to $10.4 million for the three month period ended December 31, 2017. The decrease in Adjusted Net Income of $5.3 million was due to a: (i) $6.1 million decrease in adjusted EBITDA; and (ii) $1.3 million increase in interest expense and finance cost, net. The above decrease was partially mitigated by a: (i) $0.2 million decrease in direct vessel expenses; (ii) $1.7 million decrease in depreciation and amortization expense; and (iii) $0.3 million increase in interest income.

Years ended December 31, 2018 and 2017

The details below exclude the impact of the consolidation of Navios Containers for the periods presented as it is intended to provide investors with a clearer picture of Navios Partners on a going forward basis. Navios Containers’ effect on time charter and voyage revenues and adjusted EBITDA for the period from April 28, 2017 (date of inception) to August 29, 2017 was $12.4 million and $6.7 million, respectively.

Time charter and voyage revenues for Navios Partners for the year ended December 31, 2018 increased by $32.1 million, or 16.1%, to $231.4 million, as compared to $199.3 million for the same period in 2017. The increase in time charter and voyage revenues was mainly attributable to: (i) the increase in revenue following the acquisition of seven vessels in 2017 and five vessels in 2018; and (ii) the increase in the TCE rate to $16,458 per day for the year ended December 31, 2018, from $16,025 per day for the year ended December 31, 2017 due to the increase in the freight market. That increase was partially mitigated by the decrease in revenue due to the sales of the MSC Cristina, the Navios Apollon and the Navios Gemini S in 2017 and the YM Unity, the YM Utmost, the Navios Felicity and the Navios Libra II in 2018. The available days of the fleet increased to 13,448 days for the year ended December 31, 2018, as compared to 12,193 days for the year ended December 31, 2017, mainly due to the increased fleet.

EBITDA of Navios Partners for the year ended December 31, 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) $2.5 million equity compensation expense; (iv) $2.0 million write down of a guarantee claim receivable; (v) $1.2 million impairment loss on the sale of the Navios Libra II; and (vi) $0.6 million other than temporary impairment on dividend in kind. EBITDA of Navios Partners for the year ended December 31, 2017 was negatively affected by the accounting effect of a: (i) $4.1 million gain on change in control from Navios Containers’ deconsolidation; (ii) $30.3 million impairment loss on the Navios Hope; (iii) $2.4 million impairment loss on the sale of the Navios Gemini S; (iv) $1.5 million allowance for doubtful accounts; (v) $1.3 million loss related to the sale of the MSC Cristina; and (vi) $1.9 million equity compensation expense. Excluding these items, Adjusted EBITDA increased by $12.6 million to $139.1 million for the year ended December 31, 2018, as compared to $126.6 million for the same period in 2017. The increase in Adjusted EBITDA was primarily due to a: (i) $32.1 million increase in revenue; and (ii) $3.7 million increase in equity in net earnings of affiliated companies. The above increase was partially mitigated by: (i) a $6.1 million increase in time charter and voyage expenses; (ii) a $6.3 million increase in management fees; (iii) a $1.4 million increase in general and administrative expenses; (iv) a $8.3 million decrease in other income; and (v) a $1.0 million increase in other expenses.

The reserves for estimated maintenance and replacement capital expenditures for the year ended December 31, 2018 and 2017 were $26.8 million and $14.9 million, respectively (please see “Reconciliation of Non-GAAP Financial Measures” in Exhibit 3).

Navios Partners generated an operating surplus for the year ended December 31, 2018 of $77.9 million, compared to $92.6 million for the year period ended December 31, 2017. 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 of Navios Partners for the year ended December 31, 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) $2.5 million equity compensation expense; (iv) $2.0 million write down of a guarantee claim receivable; (v) $1.2 million impairment loss on the sale of the Navios Libra II; (vi) $0.6 million other than temporary impairment on dividend in kind; and (vii) $0.4 million write-off of deferred finance fees. Net Income of Navios Partners for the year ended December 31, 2017 was negatively affected by the accounting effect of a: (i) $4.1 million gain on change in control from Navios Containers’ deconsolidation; (ii) $30.3 million impairment loss on the Navios Hope; (iii) $2.4 million impairment loss on the sale of the Navios Gemini S; (iv) $3.2 million write-off of deferred finance fees and discount related to the refinancing of the Term Loan B Facility; (v) $1.5 million allowance for doubtful accounts; (vi) $1.3 million loss related to the sale of the MSC Cristina; and (vii) $1.9 million equity compensation expense. Excluding these items, Adjusted Net Income for the year ended December 31, 2018 amounted to $36.7 million compared to $21.0 million for the year ended December 31, 2017. The increase in Adjusted Net Income of $15.7 million was due to: (i) a $12.6 million increase in Adjusted EBITDA; (ii) a $0.5 million decrease in direct vessel expenses; (iii) a $9.6 million decrease in depreciation and amortization expense; and (iv) a $0.9 million increase in interest income. The above increase was partially mitigated by a $7.9 million increase in interest expense and finance cost, net.

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