Navios Partners profitable in third quarter

Navios-NYSE

Navios Maritime Partners L.P., an international owner and operator of dry cargo vessels, reported its financial results for the third quarter and nine month period ended September 30, 2020.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “I am pleased with our results for the third quarter of 2020. During the third quarter, Navios Partners reported adjusted EBITDA of $30.9 million and adjusted net income of $8.8 million.”

Angeliki Frangou continued, “Drybulk demand in the first half of 2020 suffered from the global shutdown. However, fiscal stimulus and other policy measures helped economies heal in the third quarter. We believe that this healing process continues as we learn to live within the constraints of the pandemic and as new purchasing patterns emerge. Looking forward, the economic outlook for 2021 is favorable as the IMF expects global GDP to grow by 5.2% and drybulk trade is projected to increase by 3.9%.”

Fleet Developments

$51.0 million acquisition of vessels

In September 2020, Navios Partners acquired the Navios Gem, a 2014-Japanese built Capesize vessel of 181,336 dwt, and the Navios Victory, a 2014-Japanese built Panamax vessel of 77,095 dwt, from Navios Maritime Holdings Inc. (“Navios Holdings”) (NYSE:NM). The vessels were acquired for a purchase price of $51.0 million, including working capital adjustments.

$12.7 million sale of two vessels

In October 2020, Navios Partners agreed to sell the Esperanza N, a 2008-built Containership of 2,007 TEU and the Navios Soleil, a 2009-built Ultra–Handymax vessel of 57,337 dwt for net sale prices of $4.6 million and $8.2 million, respectively. The Company is expected to recognize a book loss from the sale of these two vessels of approximately $11.7 million, of which $1.8 million has already been included in the third quarter of 2020. The sales are expected to be completed by the end of January 2021.

Financing Arrangements

In September 2020, Navios Partners entered into a new credit facility with a commercial bank for a total amount of $33.0 million in order to finance the acquisition of the Navios Gem and the Navios Victory. The credit facility has an amortization profile of 9.7 years, matures in September 2025 and bears interest at LIBOR plus 325 bps per annum.

Cash Distribution

The Board of Directors of Navios Partners declared a cash distribution for the third quarter of 2020 of $0.05 per unit. The cash distribution is payable on November 13, 2020 to all unitholders of record as of November 9, 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 1.5 years. Navios Partners has currently contracted out 98.7% of its available days for 2020, 45.5% for 2021 and 18.8% for 2022, including index-linked charters, expecting to generate revenues (excluding index-linked charters) of approximately $210.7 million, $98.1 million and $71.9 million, respectively. The average contracted daily charter-out rate for the fleet is $12,804, $20,820 and $28,632 for 2020, 2021 and 2022, 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 and nine month periods ended September 30, 2020 and 2019. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. Adjusted EBITDA, Adjusted Earnings/ (Loss) per Common Unit, Adjusted Net Income/ (Loss) and Operating Surplus 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”).

(1) Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Common Unit for the three month period ended September 30, 2020 have been adjusted to exclude a $1.8 million impairment loss related to the sale of one of our vessels.

(2) Adjusted Net Income and Adjusted Earnings per Common Unit for the three month period ended September 30, 2019 have been adjusted to exclude a $1.4 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the third quarter of 2019.

(3) Adjusted EBITDA, Adjusted Net Loss and Adjusted Loss per Common Unit for the nine month period ended September 30, 2020 have been adjusted to exclude a $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II, a $6.8 million impairment loss related to three containerships and a $1.8 million impairment loss relating to the sale of one of our vessels.

(4) Adjusted Net Income and Adjusted Earnings per Common Unit for the nine month period ended September 30, 2019 have been adjusted to exclude a $7.3 million impairment loss related to the sale of one of our vessels, a $3.6 million revision of the estimated guarantee claim receivable and a $2.9 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility.

(5) Adjusted EBITDA for the nine month period ended September 30, 2019 has been adjusted to exclude a $7.3 million impairment loss related to the sale of one of our vessels and a $3.6 million revision of the estimated guarantee claim receivable.

Three month periods ended September 30, 2020 and 2019

Time charter and voyage revenues for the three month period ended September 30, 2020 increased by $1.0 million, or 1.5%, to $64.5 million, as compared to $63.5 million for the same period in 2019. The increase in time charter and voyage revenues was mainly attributable to the increase in the size of our fleet. For the three month period ended September 30, 2020, the time charter equivalent rate, or TCE rate, decreased to $13,652 per day, in relation to $18,778 per day which was for the three month period ended September 30, 2019. The available days of the fleet increased to 4,499 days for the three month period ended September 30, 2020, as compared to 3,240 days for the three month period ended September 30, 2019.

EBITDA for the three month period ended September 30, 2020 was negatively affected by the accounting effect of a $1.8 million impairment loss related to the sale of one of our vessels. Excluding this item, Adjusted EBITDA decreased by $10.4 million to $30.9 million for the three month period ended September 30, 2020, as compared to $41.3 million for the same period in 2019. The decrease in Adjusted EBITDA was primarily due to a: (i) $0.9 million increase in time charter voyage expenses; (ii) $7.6 million increase in vessel operating expenses, mainly due to the increased fleet; (iii) $0.8 million increase in general and administrative expenses, mainly due to the increased fleet; (iv) $0.3 million increase in other expenses; and (v) $1.7 million decrease in equity in net earnings of affiliated companies. The above decrease was partially mitigated by a: (i) $1.0 million increase in time charter and voyage revenues; and (ii) $0.1 million increase in other income.

The reserves for estimated maintenance and replacement capital expenditures for the three month periods ended September 30, 2020 and 2019 were $9.5 million and $7.2 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 September 30, 2020 of $16.0 million, as compared to $25.7 million for the three month period ended September 30, 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 Income for the three month period ended September 30, 2020 was negatively affected by the accounting effect of a $1.8 million impairment loss related to the sale of one of our vessels. Net Income for the three month period ended September 30, 2019 was negatively affected by the accounting effect of a $1.4 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the third quarter of 2019. Excluding these items, Adjusted Net Income for the three month period ended September 30, 2020 amounted to $8.8 million compared to $18.3 million income for the three month period ended September 30, 2019. The decrease in Adjusted Net Income of $9.5 million was due to a: (i) $10.4 million decrease in Adjusted EBITDA; (ii) $1.0 million increase in direct vessel expenses; (iii) $1.0 million increase in depreciation and amortization expense; and (iv) $1.7 million decrease in interest income. The above decrease was partially mitigated by a $4.6 million decrease in interest expense and finance cost, net.

Nine month periods ended September 30, 2020 and 2019

Time charter and voyage revenues for the nine month period ended September 30, 2020 decreased by $0.6 million, or 0.4%, to $157.5 million, as compared to $158.1 million for the same period in 2019. The decrease in time charter and voyage revenues was mainly attributable to the decrease in the TCE rate to $11,917 per day for the nine month period ended September 30, 2020 from $15,369 per day for the nine month period ended September 30, 2019. The available days of the fleet increased to 12,625 days for the nine month period ended September 30, 2020, as compared to 9,720 days for the nine month period ended September 30, 2019, mainly due to the increase in the size of the fleet.

EBITDA for the nine month period ended September 30, 2020 was negatively affected by the accounting effect of a: (i) $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II; (ii) $6.8 million impairment loss related to three containerships; and (iii) $1.8 million impairment loss related to the sale of one of our vessels. EBITDA for the nine month period ended September 30, 2019 was negatively affected by the accounting effect of a: (i) $7.3 million impairment loss related to the sale of one of our vessels; and (ii) $3.6 million revision of the estimated guarantee claim receivable. Excluding these items, Adjusted EBITDA decreased by $22.0 million to $64.3 million for the nine month period ended September 30, 2020, as compared to $86.3 million for the same period in 2019. The decrease in Adjusted EBITDA was primarily due to (i) a $0.6 million decrease in time charter and voyage revenues; (ii) an $18.6 million increase in vessel operating expenses, mainly due to the increased fleet; (iii) a $1.4 million increase in general and administrative expenses, mainly due to the increased fleet; (iv) a $2.2 million increase in other expenses; and (v) a $1.0 million decrease in equity in net earnings of affiliated companies. The above decrease was partially mitigated by a: (i) $0.1 million decrease in time charter and voyage expenses; and (ii) $1.6 million increase in other income.

The reserves for estimated maintenance and replacement capital expenditures for the nine month periods ended September 30, 2020 and 2019 were $26.7 million and $21.9 million, respectively (please see “Reconciliation of Non-GAAP Financial Measures” in Exhibit 3).

Navios Partners generated an operating surplus for the nine month period ended September 30, 2020 of $19.3 million, as compared to $37.6 million for the nine month period ended September 30, 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 nine month period ended September 30, 2020 was negatively affected by the accounting effect of a: (i) $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II; (ii) $6.8 million impairment loss related to three containerships; and (iii) $1.8 million impairment loss related to the sale of one of our vessels. Net Income for the nine month period ended September 30, 2019 was negatively affected by the accounting effect of a: (i) $7.3 million impairment loss related to the sale of one of our vessels; (ii) $3.6 million revision of the estimated guarantee claim receivable; and (iii) $2.9 million write-off of deferred finance fees and discount related to prepayments of the Term Loan B Facility in the nine month period ended September 30, 2019. Excluding these items, Adjusted Net Loss for the nine month period ended September 30, 2020 amounted to $2.9 million compared to $14.7 million income for the nine month period ended September 30, 2019. The increase in Adjusted Net Loss of $17.6 million was due to a: (i) $22.0 million decrease in adjusted EBITDA; (ii) $2.8 million increase in direct vessel expenses; (iii) $1.6 million increase in depreciation and amortization expense; and (iv) $4.9 million decrease in interest income. The above increase was partially mitigated by a $13.7 million decrease in interest expense and finance cost, net.

Fleet Employment Profile

The following table reflects certain key indicators of Navios Partners’ core fleet performance for the three and nine month periods ended September 30, 2020 and 2019.

(1) Available days for the fleet represent total calendar days the vessels were in Navios Partners’ possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues.

(2) Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire. Operating days include ballast days between voyages. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.

(3) Fleet utilization is the percentage of time that Navios Partners’ vessels were available for revenue generating available days, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, dry dockings or special surveys.

(4) TCE rate: Time Charter Equivalent rate per day is defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate per day is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet.

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