Navios Partners announces 3 acquisitions, 11 sales after strong 2022

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Navios Maritime Partners L.P., an international owner and operator of dry cargo and tanker vessels, reported its financial results for the fourth quarter and year ended December 31, 2022.

Angeliki Frangou, Chairwoman and Chief Executive Officer of Navios Partners stated, “I am pleased with the results for the full year and the fourth quarter of 2022. For the full year of 2022, we reported revenue and net income of $1.2 billion and $579.2 million, respectively. For the fourth quarter of 2022, we reported revenue of $370.9 million and net income of $118.3 million. We are also pleased to report earnings per common unit of $18.82 for the full year of 2022.”

Angeliki Frangou continued, “Navios Partners is a leading publicly listed shipping company diversified in 15 asset classes in three sectors, with 176 vessels with an average vessel age of about 9.5 years. We have been rationalizing our portfolio to maintain a younger, technologically advanced fleet and remain focused on reducing leverage rates in medium term, which we believe we can do naturally in the current charter rate market.”

Fleet update

Acquisition of two Newbuilding MR2 Product Tanker vessels and one Capesize vessel

In December 2022, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel has approximately 52,000 dwt and is being bareboat-in for ten years. Navios Partners has the option to acquire the vessels starting at the end of year four until the end of the charter period. Assuming the exercise of the option at the end of the 10-year period, the bareboat agreements reflect an implied price of approximately $40.0 million per vessel and an implied effective interest of approximately 7.0%. The vessels are expected to be delivered into Navios Partners’ fleet during the second half of 2025 and the first half of 2026. The closing of the transaction is subject to completion of customary documentation.

In February 2023, Navios Partners agreed to acquire from an unrelated third party, the Navios Felix, a previously chartered-in 2016-built scrubber-fitted Capesize vessel of 181,221 dwt for a contract price of approximately $40.7 million with final payment to be determined on the actual delivery date of the vessel. The delivery of the vessel is expected within the first quarter of 2023.

Agreed to sell 11 vessels for approximately $214 million

On February 6, 2023, Navios Partners agreed to sell the Serenitas N, a 2011-built Ultra-Handymax vessel of 56,644 dwt, to an unrelated third party, for a sales price of $12.3 million. The sale is expected to be completed during the second quarter of 2023.

On February 6, 2023, Navios Partners agreed to sell the Nave Photon, a 2008-built VLCC vessel of 297,395 dwt, to an unrelated third party, for a sales price of $53.0 million. The sale is expected to be completed during the first quarter of 2023.

On January 5, 2023, Navios Partners agreed to sell the Navios Prosperity I, a 2007-built Panamax vessel of 75,527 dwt, to an unrelated third party, for a sales price of $13.8 million. The sale was completed on February 7, 2023.

On January 3, 2023, Navios Partners agreed to sell the Aurora N, a 2008-built LR1 Product Tanker vessel of 63,495 dwt, to an unrelated third party, for a sales price of $22.5 million. The sale is expected to be completed during the second quarter of 2023.

On December 30, 2022, Navios Partners agreed to sell the Navios Amaryllis, a 2008-built Ultra-Handymax vessel of 58,735 dwt, to an unrelated third party, for a sales price of $15.1 million. The sale was completed on January 26, 2023.

On December 19, 2022, Navios Partners agreed to sell the Jupiter N, a 2011-built Post-Panamax vessel of 93,062 dwt, to an unrelated third party, for a sales price of $16.4 million. The sale was completed on February 3, 2023.

On December 5, 2022, Navios Partners agreed to sell the Nave Polaris, a 2011-built Chemical Tanker vessel of 25,145 dwt, to an unrelated third party, for a sales price of $14.7 million. The sale was completed on January 24, 2023.

On December 5, 2022, Navios Partners agreed to sell the Nave Cosmos, a 2010-built Chemical Tanker vessel of 25,130 dwt, to an unrelated third party, for a sales price of $13.6 million. The sale was completed on January 9, 2023.

On December 1, 2022, Navios Partners agreed to sell the Star N, a 2009-built MR1 Product Tanker vessel of 37,836 dwt, to an unrelated third party, for a sales price of $18.1 million. The sale was completed on January 26 2023.

On November 30, 2022, Navios Partners agreed to sell the Nave Dorado, a 2005-built MR2 Product Tanker vessel of 47,999 dwt, to an unrelated third party, for a sales price of $15.6 million. The sale was completed on January 17, 2023.

On November 24, 2022, Navios Partners agreed to sell the Perseus N, a 2009-built MR1 Product Tanker vessel of 36,264 dwt, to an unrelated third party, for a sales price of $18.5 million. The sale was completed on December 23, 2022.

Approximately $328 million revenue contracted in the fourth quarter of 2022 – $3.4 billion total contracted revenue

During the fourth quarter of 2022, Navios Partners entered into long-term charters which are expected to generate revenue of approximately $328 million.

Three newbuilding Capesize vessels, expected to be delivered in the first half of 2023, have been chartered-out for an average period of 4.8 years, at an average rate of $19,566 net per day.

Two 115,000 dwt Aframax/LR2 newbuilding vessels, expected to be delivered in the first half of 2025, have been chartered-out for an average period of five years, at a rate of $27,798 net per day. The charterer has an option to extend each of the charters for further five one-year options at rates increasing by $1,234 per day each year.

Three MR2 Product Tanker vessels have been chartered-out for an average period of 2.3 years, at an average rate of $24,654 net per day.

Two LR1 Product Tanker vessels have been chartered-out for an average period of 2.1 years, at an average rate of $30,632 net per day.

One VLCC vessel has been chartered-out for an average period of 0.9 years, at an average rate of $45,425 net per day.

Following the above long-term charters, Navios Partners has $3.4 billion contracted revenue through 2036.

Financing update

In February 2023, Navios Partners completed a $32.0 million sale and leaseback transaction with an unrelated third party, in order to finance one drybulk vessel. The sale and leaseback transaction: (i) matures ten years from the date of the delivery of the vessel by the owners to the charterer; and (ii) bears interest at Libor plus 200 bps per annum.

In December 2022, Navios Partners completed a $10.5 million sale and leaseback transaction with an unrelated third party, in order to finance one drybulk vessel. The sale and leaseback transaction: (i) matures four years from the date of the delivery of the vessel by the owners to the charterer; and (ii) bears interest at Libor plus 230 bps per annum.

On December 21, 2022, Navios Partners entered into a new credit facility with a commercial bank for up to $44.2 million in order to refinance existing indebtedness of three product tanker vessels. The credit facility: (i) matures five years after the drawdown date; and (ii) bears interest at Term Secured Overnight Financing Rate (“SOFR”) plus 195 bps per annum.

As discussed above, in December 2022, Navios Partners agreed to enter into a bareboat-in agreement for two Japanese newbuilding tanker vessels. The total implied amount financed for the two vessels is approximately $62.0 million and the implied effective interest rate is 7.0%. The closing of the transaction is subject to completion of customary documentation.

Cash distribution

The Board of Directors of Navios Partners declared a cash distribution for the fourth quarter of 2022 of $0.05 per unit. The cash distribution was paid on February 14, 2023 to unitholders of record as of February 10, 2023. 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.

Operating Highlights

Navios Partners owns and operates a fleet comprised of 83 drybulk vessels, 47 containerships and 46 tanker vessels, including three newbuilding Capesize chartered-in vessels under bareboat contracts expected to be delivered in the first half of 2023, six newbuilding Aframax/LR2 vessels expected to be delivered in 2024 and the first half of 2025, two newbuilding MR2 Product Tanker chartered-in vessels under bareboat contracts expected to be delivered in the second half of 2025 and the first half of 2026 and 12 newbuilding Containerships expected to be delivered by the second half of 2023 and in 2024. The fleet excludes one VLCC, one Ultra-Handymax and one LR1 Product Tanker vessels agreed to be sold.

Navios Partners has entered into short, medium and long-term time charter-out, bareboat-out and freight agreements for its vessels with a remaining average term of approximately 1.9 years. Navios Partners has currently fixed 52.2% and 35.0% of its available days for 2023 and for 2024, respectively. Navios Partners expects to generate contracted revenue of approximately $831.9 million and $644.5 million for 2023 and for 2024, respectively. The average expected daily charter-out rate for the fleet is $28,017 and $31,598 for 2023 and for 2024, respectively.

EARNINGS HIGHLIGHTS

For the following results and the selected financial data presented herein, Navios Partners has compiled condensed consolidated statements of operations for the three month periods and years ended December 31, 2022 and 2021. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA, Adjusted EBITDA, Adjusted Earnings per Common Unit basic and diluted and Adjusted Net Income are non-GAAP financial measures and should not be used in isolation or substitution for Navios Partners’ results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Upon completion of the merger (“NMCI Merger”) with Navios Maritime Containers L.P. (“Navios Containers”) on March 31, 2021, beginning from April 1, 2021, and obtaining control over Navios Maritime Acquisition Corporation (“Navios Acquisition”) on August 25, 2021, beginning from August 26, 2021, the results of operations of Navios Containers and Navios Acquisition are included in Navios Partners’ Consolidated Statements of Operations. On October 15, 2021, Navios Partners completed its merger (“NNA Merger”) with Navios Acquisition. In September 2022, Navios Partners completed the acquisition of a 36-vessel drybulk fleet from Navios Maritime Holdings Inc. (“Navios Holdings”).

Three month periods ended December 31, 2022 and 2021

Time charter and voyage revenues for the three month period ended December 31, 2022 increased by $102.8 million, or 38.3%, to $370.9 million, as compared to $268.1 million for the same period in 2021. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in Time Charter Equivalent (“TCE”) rate. For the three month period ended December 31, 2022, the time charter and voyage revenues were affected by $18.1 million relating to the straight line effect of the containerships and tankers charters with de-escalating rates. The TCE rate increased by 3.6% to $23,840 per day, as compared to $23,005 per day for the same period in 2021. The available days of the fleet increased by 26.8% to 14,409 days for the three month period ended December 31, 2022, as compared to 11,363 days for the same period in 2021 mainly due to the acquisition of the 36-vessel drybulk fleet from Navios Holdings and the deliveries of newbuilding and secondhand vessels, partially mitigated by the sale of vessels.

EBITDA of Navios Partners for the three month periods ended December 31, 2022 and 2021 was affected by the items described in the table above. Excluding these items, Adjusted EBITDA increased by $44.0 million to $200.6 million for the three month period ended December 31, 2022, as compared to $156.6 million for the same period in 2021. The increase in Adjusted EBITDA was primarily due to a $102.8 million increase in time charter and voyage revenues, partially mitigated by a: (i) $32.0 million increase in time charter and voyage expenses, mainly due to the increase in a) bunker expenses arising from the increased number of freight voyages in the fourth quarter of 2022 and b) bareboat and charter-in hire expense of the tanker and drybulk fleet; (ii) $13.1 million increase in vessel operating expenses, mainly due to the expansion of our fleet; (iii) $6.8 million increase in general and administrative expenses, mainly due to the expansion of our fleet; (iv) $3.0 million increase in other expenses, net; (v) $2.8 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); and (vi) $1.1 million decrease in net loss attributable to noncontrolling interest.

Net Income attributable to Navios Partners’ unitholders for the three month periods ended December 31, 2022 and 2021 was affected by the items described in the table above. Excluding these items, Adjusted Net Income attributable to Navios Partners’ unitholders decreased by $9.1 million to $112.7 million for the three month period ended December 31, 2022, as compared to $121.8 million for the same period in 2021. The decrease in Adjusted Net Income attributable to Navios Partners’ unitholders was primarily due to: (i) a $20.1 million decrease in the amortization of the unfavorable lease terms; (ii) an $18.0 million increase in interest expense and finance cost, net; (iii) a $12.5 million increase in depreciation and amortization expense; and (iv) a $3.3 million increase in amortization of deferred drydock, special survey costs and other capitalized items, partially mitigated by a: (i) $44.0 million increase in Adjusted EBITDA; and (ii) $0.8 million increase in interest income.

Years ended December 31, 2022 and 2021

Time charter and voyage revenues of Navios Partners for the year ended December 31, 2022 increased by $497.3 million, or 69.7%, to $1,210.5 million, as compared to $713.2 million for the same period in 2021. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in the TCE rate. For the year ended December 31, 2022, the time charter and voyage revenues were affected by $48.2 million relating to the straight line effect of the containerships and tankers charters with de-escalating rates. The TCE rate increased by 6.1% to $23,042 per day, as compared to $21,709 per day in the same period in 2021. The available days of the fleet increased by 56.2% to 49,804 days for the year ended December 31, 2022, as compared to 31,884 days in the same period in 2021 mainly due to the acquisition of the 36-vessel drybulk fleet from Navios Holdings, the NMCI Merger, the NNA Merger and the deliveries of newbuilding and secondhand vessels, partially mitigated by the sale of vessels.

EBITDA of Navios Partners for the years ended December 31, 2022 and 2021 was affected by the items described in the table above. Excluding these items, Adjusted EBITDA increased by $241.4 million to $667.9 million for the year ended December 31, 2022, as compared to $426.5 million for the same period in 2021. The increase in Adjusted EBITDA was primarily due to a $497.3 million increase in time charter and voyage revenues, partially mitigated by: (i) a $120.6 million increase in vessel operating expenses, mainly due to the expansion of our fleet; (ii) an $86.5 million increase in time charter and voyage expenses, mainly due to the increase in a) bareboat and charter-in hire expense of the tanker and drybulk fleet and b) bunker expenses arising from the increased number of freight voyages in 2022; (iii) a $25.7 million increase in general and administrative expenses, mainly due to the expansion of our fleet; (iv) a $14.7 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (v) a $4.9 million decrease in net loss attributable to noncontrolling interest; and (vi) a $3.5 million increase in other expenses, net.

Net Income attributable to Navios Partners’ unitholders for the years ended December 31, 2022 and 2021 was affected by items described in the table above. Excluding these items, Adjusted Net Income attributable to Navios Partners’ unitholders increased by $65.8 million to $429.9 million for the year ended December 31, 2022, as compared to $364.1 million for the same period in 2021. The increase in Adjusted Net Income attributable to Navios Partners’ unitholders was primarily due to a $241.4 million increase in Adjusted EBITDA, partially mitigated by: (i) an $89.0 million increase in depreciation and amortization expense; (ii) a $40.3 million increase in interest expense and finance cost, net; (iii) a $33.5 million decrease in the amortization of the unfavorable lease terms; and (iv) a $12.8 million increase in amortization for deferred drydock, special survey costs and other capitalized items.

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