Navios Maritime Holdings Inc., a global, vertically integrated seaborne shipping and logistics company, reported financial results for the first quarter ended March 31, 2016.
Angeliki Frangou, Chairman and Chief Executive Officer, stated, “Navios Holdings had a solid first quarter performance, earning $45.4 million in EBITDA, an increase of 73% compared to the same period last year. Our balance sheet is strong, with $156.6 million of cash as of March 31, 2016, and flexible, with about 83% of our total debt in bonds that have no loan to value maintenance requirement. We also worked hard to improve our liquidity through more than $45 million of cost savings initiatives, and anticipate no longer having to fund working capital needs of our public affiliates in the future.”
Angeliki Frangou continued: “We are proud of our overall cost management. General and administrative expenses, on a per available day basis, makes us one of the lowest compared to our publicly listed shipping peers, particularly having reduced 2016 general and administrative expenses by an estimated 35% over 2015, on a run rate basis. Operating costs are 42% less than the industry average, excluding embedded fees that certain peers charge that we do not. Overall, we believe we have one of the leading cost containment programs in the industry.”
HIGHLIGHTS — RECENT DEVELOPMENTS
Cost Efficient Liquidity Management
Navios Holding actively monitors its cost exposure and cash flows having developed significant efficiencies from in-house capabilities and economies of scale for its controlled and managed fleet. The immediate benefits of these efforts to Navios Holdings cost structure were:
– $14.9 million from the early settlement of charter claims in Q1 2016
– ~$23.0 million estimated reduction of charter-in costs over the next 12 months
– ~$7.0 million estimated annualized G&A reduction in 2016 run rate basis Q1 2016; 35% decrease compared to 2015
– Operating costs ~42% lower than industry average
Navios Holdings shares its economies of scale with its affiliates by offering management and commercial services at flat rates without charging additional fees or commissions for commercial management, sales or purchase transactions, originating any loan or otherwise. However, such significant cost benefits shared with affiliates should no longer require any working capital advances by Navios Holdings.
Time Charter Coverage
Navios Holdings controls a fleet of 61 vessels totaling 6.3 million dwt, of which 40 are owned and 21 are chartered-in under long-term charters (collectively, the “Core Fleet”). Navios Holdings currently operates 57 vessels (19 Capesize, 18 Panamax, 18 Ultra Handymax and two Handysize vessels) totaling 5.9 million dwt. The current average age of the operating fleet is 7.5 years. Additionally, Navios Holdings has four newbuilding charter-in vessels expected to be delivered at various dates beginning in the fourth quarter of 2016 until 2017.
As of May 4, 2016, Navios Holdings has chartered-out 81.4% and 34.1% of available days for the remaining nine months of 2016 and for 2017, respectively (including index-linked charters), which are expected to generate $76.9 million and $19.6 million in base revenue, respectively. The average daily charter-out base rate for the Core Fleet is $9,599 and $15,416 for the remaining nine months of 2016 and for 2017, respectively. The average daily charter-in rate for the active long-term charter-in vessels for the remaining nine months of 2016 is estimated at $11,613.
The above figures do not include the fleet of Navios South American Logistics Inc. (“Navios Logistics”) and vessels servicing contracts of affreightment.
Revenue from dry bulk vessel operations for the three months ended March 31, 2016 was $46.3 million as compared to $53.2 million for the same period during 2015. The decrease in dry bulk revenue was mainly attributable to a decrease in the time charter equivalent rate (“TCE”) per day by 2.6% to $7,008 per day in the first quarter of 2016, as compared to $7,196 per day in the same period of 2015. This decrease was partially mitigated by a net increase in available days of our fleet by 621 days.
Revenue from the logistics business was $55.2 million for the three months ended March 31, 2016 as compared to $65.1 million for the same period during 2015. The decrease was mainly attributable to a decrease of $10.5 million in sales of products in the liquid terminal, due to lower volume and lower price of products sold, partially mitigated by higher revenue in the barge segment due to increased dry and liquid cargoes transported.
Net Loss of Navios Holdings for the three months ended March 31, 2016 was $7.5 million as compared to $26.7 million for the same period of 2015. The $19.2 million decrease in Net Loss was mainly due to (i) an increase in EBITDA by $19.2 million; (ii) a decrease in depreciation and amortization by $1.4 million; and (iii) a decrease in interest expense and finance cost, net by $0.2 million. This overall decrease was partially mitigated by (i) an increase in amortization for deferred drydock and special survey costs of $0.4 million; (ii) an increase in income tax expense of $1.1 million; and (iii) an increase in share-based compensation expense of $0.1 million.
EBITDA of Navios Holdings for the three months ended March 31, 2016 increased by $19.2 million to $45.4 million as compared to $26.2 million for the same period of 2015. The $19.2 million increase in EBITDA was primarily due to (i) a $23.5 million decrease in time charter, voyage and logistics business expenses; (ii) a $1.1 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $13.6 million increase in other income, net; and (iv) a $0.5 million decrease in general and administrative expenses (excluding share-based compensation expenses). This overall increase of $38.7 million was partially mitigated by (i) a $16.8 million decrease in revenue; (ii) a $1.8 million increase in net income attributable to the noncontrolling interest; and (iii) a $0.9 million decrease in equity in net earnings from affiliated companies.
EBITDA of Navios Logistics was $21.1 million for the three month period ended March 31, 2016 as compared to $15.6 million for the same period in 2015.