first quarter 2013 earnings presentation april 25,...
TRANSCRIPT
Statements in this presentation which are not statements of historical fact are “forward-looking statements” (as such term is defined in Section 21E
of the Securities Exchange Act of 1934, as amended). These forward-looking statements are based on the information available to, and the
expectations and assumptions deemed reasonable by, the Company at the time this presentation was made. Although the Company believes that
the assumptions underlying such statements are reasonable, it can give no assurance that they will be attained. The Company undertakes no
obligation to update any forward-looking statements, whether as a result of new information or future events, unless it is required to do so under the
securities laws. The Company makes no prediction or statement about the performance of its common units. For the selected financial data
presented herein, Navios Partners compiled consolidated statement of operations for the three month periods ended March 31, 2013 and March 31,
2012.
.
First Quarter 2013 Earnings Presentation
April 25, 2013
100% Membership Interest
2.0% General Partner Interest
Incentive Distribution Rights
76.6% Limited Partner Interest 21.4% Limited Partner Interest
25 Dry Bulk Vessels
8 Capesize, 14 Panamax and 3 Ultra Handymax Dry Bulk Carriers
100% Membership Interest
Navios GP L.L.C.
(General Partner)
Navios Maritime Partners L.P.
NYSE: NMM
Common Unitholders Navios Maritime Holdings Inc.
NYSE: NM
Navios Partners Ownership Structure
2
Recent Developments $73.2 million “overnight” equity raising, completed February 2013
• 5,175,000 common units issued at $14.15 per unit including overallotment of 675,000 units
exercised by underwriters
$108.0 million acquisition of four Japanese-built vessels
• Expected to be financed 50% by bank debt consistent with existing credit facilities
• Attractive entry point - breakeven of $8,973 per day per vessel
• Significant potential accretion - every $1,000 above breakeven provides $0.02 accretion per unit
• Structured delivery Q4 2013, onward
$50.0 million prepayment to DVB/Commerzbank Facility
• Reduction in cash flow breakeven:
• $1,960/per day per vessel reduction in 2013
• $3,492/per day per vessel reduction in 2014
3
Type Year Built DWT Delivery
Capesize Newbuilding 180,000 Q4 2013
Ultra-Handymax Newbuilding 61,000 Q1 2014
Kamsarmax 2006 82,790 Q4 2013
Panamax 2005 76,619 Q4 2013
Multiple Avenues of Distribution Growth
Since IPO: 26.4% Distribution increase
325% Operational fleet capacity increase
• Exercised purchase option for
Navios Fantastiks in Q2 2008
and Navios Sagittarius in Q1
2010
• Purchase options on Navios
Prosperity and Navios
Aldebaran
4
Exercising Purchase
Options
Opportunities in the
Dry Bulk S&P Market
Through Navios
Group Vessels
• Vessel values have fallen
significantly from 2008 highs
• Six vessels acquired in the
open market
• Highly fragmented industry
• Distressed opportunities
expected to arise
• Right to purchase Capesize
and Panamax vessels on 3+
year charters
• Eleven vessels dropped down
since IPO
• Navios Group has grown to a
controlled fleet of 107 vessels
of which 73 are dry bulk
vessels
April 2013
2,659,512 DWT
November 2007 IPO
626,100 DWT +325%(1)
(1) Includes owned and chartered-in tonnage
First Quarter March 31, 2013 Earnings Highlights
5
Earnings Highlights
(in $ million) except active vessels and available days
Three months ended
March 31, 2013
Three months ended
March 31, 2012
Y-O-Y
Variance
Time charter revenue 50.3 48.0 4.8%
EBITDA 37.1 36.8 0.8%
Net Income 16.2 16.9 (4.1%)
EPU 0.24 0.30 (20.0%)
Operating Surplus 31.2 29.6 5.4%
Replacement Capex Reserve 3.5 4.5 (22.2%)
Active Vessels 21 18 16.7%
Available Days 1,890 1,576 19.9%
EBITDA represents net income plus interest and finance costs plus depreciation and amortization and income taxes. EBITDA is presented because
Navios Partners believes that EBITDA is a basis upon which liquidity can be assessed and presents useful information to investors regarding
Navios Partners’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends.
EBITDA is a “non-GAAP financial measure” and should not be considered a substitute for net income, cash flow from operating activities and other
operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure
of profitability or liquidity. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the
definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation.
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated
maintenance and replacement capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to
maintain over the long term the operating capacity of, or the revenue generated by, Navios Partners’ capital assets. Operating Surplus is a
quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly
cash distributions. Operating Surplus is not required by US GAAP and should not be considered as an alternative to net income or any other
indicator of Navios Partners’ performance required by US GAAP.
Balance Sheet
6
Selected Balance Sheet Data (in $ million)
March 31, 2013 December 31, 2012
Cash & cash equivalents (1) 75.2 61.7
Other current assets 9.6 8.4
Vessels, net 712.6 721.4
Total Assets 951.8 955.0
Deferred revenue, current 5.2 9.1
Other current liabilities 26.5 27.4
Long term debt, current portion 4.7 23.7
Long term debt 239.1 276.0
Total partners’ capital 676.3 618.7
Total liabilities & partners’ capital 951.8 955.0
Net Debt / Asset Value (charter attached) (2) 24.3% 32.4%
Accumulated Replacement Capex Reserve 74.5 71.0
(1) Includes restricted cash
(2) Considers Clarksons’ charter free and charter attached values of owned vessels and chartered-in vessels (less the exercise values) as of March 2013
Q1 2013 Cash Distribution
7
Operating Surplus: $31.2 million
Common Unit Coverage: 1.08x
Distribution: $29.9 million
• $28.9 million to Common Units
• $1.0 million to GP Units
Cash Distribution of $0.4425 per unit for Q1 2013 ($1.77 annualized)
Yield (as of April 24, 2013): 11.9%
Record Date: May 10, 2013
Payment Date: May 14, 2013
Tax Efficient Status – Distributions reported on Form-1099
Committed to minimum distribution of $1.77 per unit for 2013
Significant Growth: Key Operating Metrics
Net Income
1.49
1.63
1.69
1.751.77
2008 2009 2010 2011 2012
37.2% CAGR
35.1% CAGR 47.5%
CAGR
EBITDA
Operating Surplus
26.4%
Annual Distributions
8
CONFIDENTIAL – DO NOT DISTRIBUTE
Constellation Energy Group; 7.8%
Rio Tinto; 5.7%
Cosco; 11.9%
Samsun Logix; 14.5%
STX Pan Ocean; 14.1%
Korea Line; 14.5%
Hanjin; 23.4%
Other; 8.2%
9
(1) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was affirmed and will be performed by KLC on its original terms,
provided that during an interim suspension period the sub-charterer of Navios Melodia pays us directly.
20%
6%
74%
1-3 years
3-6 years
6-10 years
Portfolio of Industry Leading Charterers
Average Charter Duration: approx. 2.8 years
80% of contracted revenue secured by
charters running longer than 3 years
Diversified customer base with
strong creditworthy counterparties
Revenues by Charterer Remaining Charter Duration
(1)
CONFIDENTIAL – DO NOT DISTRIBUTE
(1) Per day, net of commission. These rates do not include insurance proceeds received upfront in December 2012
(2) Profit sharing: The owners will receive 100% of the first $1,500 in profits above the base rate and thereafter all
profits will be split 50% to each party.
(3) Profit sharing 50% on actual results above the base rates
(4) Profit sharing 50% above $16,984/day based on Baltic Panamax TC Avg
(5) Profit sharing 50% above $38,500/day based on Baltic Exchange Capesize TC Average
Staggered Charter Expirations (1)
10
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Melodia
Luz
Buena Ventura
Aurora II
Pollux
Sagittarius
Galaxy I
Fulvia
Libra II
Hyperion
Orbiter
Fantastiks
Alegria
Apollon
Gemini S
Soleil
Helios
Hope
Prosperity
Aldebaran
Felicity
$24,225 Feb 2014
$12,000 Sep 2015
$14,725 May 2013
$12,000 June 2013
$17,562 Aug 2013
$16,984 (4) Feb 2014
$13,500 Feb 2014
$37,953 Apr 2014
$21,937 Feb 2018
$26,125 Nov 2018
$42,250 Jul 2019
$29,356 (5) Nov 2020
$26,169 May 2013
$50,588 Sept 2015
$29,356 (7) Sep 2022 (6)
$38,052 Apr 2014
$41,325 Nov 2019
$14,678 Mar 2014
(2)
$29,356 (5) Oct 2020
(6) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was
affirmed and will be performed by KLC on its original terms, provided that during an interim
suspension period the sub-charterer pays Navios Partners directly
(7) Profit sharing 50% above $37,500/day based on Baltic Exchange Capesize TC Average
(8) Navios Partners fleet age weighted by DWT
(9) Source: Drewry Shipping Consultants, April 2013
$8,906 Dec 2013
$9,738 Sept 2013
(3)
(3)
Average Age of Navios Partners’ Fleet (8): 6.5 years
Average Age of Dry Bulk Industry Fleet (9): 9.7 years
2013 Charter Coverage 84.8%
CONFIDENTIAL – DO NOT DISTRIBUTE
11
GDP Growth Driven by Emerging Economies
Source: IMF April 2013
5.1 5.3 5.7
3.2 3.3 4.0
1.2 1.2 2.2
(2.0)
-
2.0
4.0
6.0
8.0
10.0
12.0
Emerging and developing economies World Advanced economies
IMF Latest Revisions of GDP Growth
(%)
April 2013 January 2013
World GDP 2013 ▼ 3.3 ▼ 3.5
2014 ▼ 4.0 ▼ 4.1
Advanced economies GDP 2013 ▼ 1.2 ▼ 1.4
2014 2.2 ▼ 2.2
Emerging markets GDP 2013 ▼ 5.3 ▼ 5.5
2014 ▼ 5.7 5.9
CONFIDENTIAL – DO NOT DISTRIBUTE
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1980 1985 1990 1995 2000 2005 2010
Tra
de
(M
illio
n T
ons)
Upside:
India
Source: Drewry Shipping Consultants Ltd.
World Dry Bulk Trade 1980 - 2013
12
2.8%
5.5%
China admitted
to the WTO
Berlin wall falls
1.1%
Fo
reca
st
CONFIDENTIAL – DO NOT DISTRIBUTE
The Southern Trade Routes: How China / India
Can Keep Growing Without the OECD
13
United States
South America
Africa
India
China
S.E.
Asia
Japan
OECD Trade Expansion 1950+
Europe
Southern Silk Route
Massive expansion in “South:
South” Trade, as expanding
economies such as China and
India invest overseas to
secure raw material supply
Source: Galbraiths, Oct 2011 and HSBC “Southern Silk Road” June 2011
Australia
Movements of Oil, Iron Ore, Coal,
Grain etc. from emerging nations in
return for investment/infrastructure,
Oil/Steel products from China and
India
CONFIDENTIAL – DO NOT DISTRIBUTE
Million tons
Iron Ore Steel Production
Domestic Production Imports
2006 580 YoY% 326 YoY% 421 YoY%
2007 707 22% 384 18% 488 16%
2008 785 11% 444 16% 500 2%
2009 873 11% 630 42% 567 13%
2010 1,065 22% 619 -2% 626 10%
2011 1,315 24% 687 11% 683 9%
2012 1,329 1% 745 9% 717 5%
2013 through Mar 287 12% 187 -0.4% 192 10%
2013E 1,295E -3%E 795E 7%E 744E 4%E
Sources: UN, World Steel Association, World Bank,
National Bureau of Statistics of China/Mysteel, Credit Suisse, SSY
Chinese Urbanization & Steel Production
26%
49%
77%
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Bil
lio
ns
China's urbanization will continue to grow
Urban Rural
-200
-100
0
100
200
300
400
2013f 2014f 2015f 2016f
MT
/yr
Change in Iron Ore Supply cumulative change from 2012 levels
Australia Brazil China (Domestic supply 62% equiv)
14
CONFIDENTIAL – DO NOT DISTRIBUTE
Sources: Clarksons, World Steel Association, McKinsey Global Institute, Central Electricity Authority,
Office of the Economic Advisor to the Government of India , Credit Suisse, IHS McCloskey
0
50
100
150
200
250
2006 2008 2010 2012E 2014F
Indian Coal Imports
2006 - 2011 CAGR = 25%
Indian Urbanization Leads to Increasing
Industrial Production
2006 – 2011 CAGR = 24%
• Coal imports Oct 2012 YTD: 20% increase YoY
• Coal fired generation Jan 2013: 78%
• Critical Coal Stock Power Plants (3/21/13): 23 out of 93
25% 30%
51%
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Billio
ns
India's urbanization will continue to grow
Urban Rural
15
40
50
60
70
80
90
Ap
r-04
Ap
r-05
Ap
r-06
Ap
r-07
Ap
r-08
Ap
r-09
Ap
r-10
Ap
r-11
Ap
r-12
GW
-Hrs
Indian Electricity Generation
CONFIDENTIAL – DO NOT DISTRIBUTE
Aging Fleet + Restricted Credit + High Scrap Price =
Accelerated Scrapping(1)
• 2009 scrapping ≈ 2.4% of fleet DWT (10.0 million DWT)
• 2010 scrapping ≈ 1.3% of fleet DWT (5.8 million DWT)
• 2011 scrapping ≈ 4.2% of fleet DWT (22.3 million DWT)
• 2012 scrapping ≈ 5.5% of fleet DWT (33.7 million DWT)
• 2013 scrapping ≈ 1.3% of fleet DWT (8.7 million DWT)
- Projected 2013 scrapping: 29.4 million DWT or 4.3%
• 2009 total dry bulk fleet ≈ 458.6 million DWT - Non delivery ≈ 40%
• 2010 total dry bulk fleet ≈ 536.6 million DWT - Non delivery ≈ 38%
• 2011 total dry bulk fleet ≈ 615.6 million DWT - Non delivery ≈ 30%
• 2012 total dry bulk fleet ≈ 679.4 million DWT - Non delivery ≈ 30%
• Net fleet growth for 2009 = 9.8%
• Net fleet growth for 2010 = 16.5%
• Net fleet growth for 2011 = 14.4%
• Net fleet growth for 2012 = 10.3%
5.9%
6.0%
0.0%
10.0%
20.0%
Total Dry Bulk Fleet
Dry Bulk Industry Age Profile(2)
(% DWT)
20+ Years
25+ Years
(1) Source: Clarksons
(2) Source: SSY Dry Bulk Forecaster, April 2013
Bulk Carrier Demolition(1)
Year Total Demolition
(m dwt)
Demolition as %
of Fleet
1998 12.2 4.60%
1999 9.1 3.40%
2000 4.5 1.60%
2001 8.1 2.80%
2002 6.0 2.00%
2003 4.1 1.40%
2004 0.3 0.10%
2005 0.9 0.30%
2006 1.8 0.50%
2007 0.4 0.10%
2008 5.0 1.20%
2009 10.0 2.37%
2010 5.8 1.26%
2011 22.3 4.17%
2012
provisional 33.7 5.4%
2013 Through
04/18/13
8.7 1.28%
2013 Projected 29.4 4.32%
Scrapping Dynamics
11.9%
(81.4 m dwt)
16
CONFIDENTIAL – DO NOT DISTRIBUTE
95.9 97.8
138.9
101.2
50.5
30.9
0
20
40
60
80
100
120
140
As of Jan 1, 2012 As of Jan 1, 2013
Source: Clarksons
2013 • March YTD: 39.1 million DWT projected; 20.9 million actual DWT delivered (47% non-delivery by DWT-preliminary)
• 253 actual deliveries, 497 newbuilds projected (49% non-delivery by # of vessels -preliminary)
2012 • 138.9 million DWT projected; 98.2 million actual DWT delivered (29% non-delivery by DWT)
• 1,192 actual deliveries, 1,665 newbuilds projected (28% non-delivery by # of vessels)
2011 • 137.3 million DWT projected; 95.9 million actual DWT delivered (30% non-delivery by DWT)
• 1,147 actual deliveries, 1,691 newbuilds projected (32% non-delivery by # of vessels)
2010 • 125.6 million DWT projected; 77.9 million actual DWT delivered (38% non-delivery by DWT)
• 957 actual deliveries, 1,528 newbuilds projected (38% non-delivery by # of vessels)
2009
• 71.3 million DWT projected, 43.1 million actual DWT delivered (40% non-delivery by DWT)
• 546 actual deliveries, 962 newbuilds projected (43% non-delivery by # of vessels)
Orderbook by year of delivery
Mill
ion D
WT
2011 2012 2013 2012 2013 2014
Before
non-delivery
Actual
non-
delivery
41.4mdwt
Dry Bulk Orderbook
Before
non-delivery
Actual
non-
delivery
41.1mdwt
• 2013 projected deliveries
(before non-delivery) is
currently 101.2 million DWT
• Based on the last two years
trend, estimated deliveries
for 2013 are approximately
70 million DWT
• 62% of Deliveries scheduled
in 1H 2013
17
CONFIDENTIAL – DO NOT DISTRIBUTE
-1.5% -0.8%
1.6% 1.2% 1.4% 1.7%
-0.3%
3.4%
-6.0% -5.2%
-8.3%
-4.4%
-1.1%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f
Seaborne Dry Bulk Supply/Demand Balance
0
2000
4000
6000
8000
10000
12000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Baltic Dry Index
Source: SSY , Baltic Exchange, 2013 Projections: SSY, Drewry, Howe Robinson
2013
Projection
Range
0%
18
+1.2%
CONFIDENTIAL – DO NOT DISTRIBUTE
Baltic Exchange Dry Index* 2002 – 2013
BDI October 2008 to date
BDI 2002 to date
* As of 04/23/2013 19
CONFIDENTIAL – DO NOT DISTRIBUTE
20
Long Term Charter Coverage
Operating Expense Visibility • Fixed operating costs until December 2013
Young, Growing Fleet
• Increased fleet capacity by more than 4x
since November 2007 IPO
• Fleet age of 6.5 years (1) vs. industry fleet age
of approx. 9.7 years (2)
Steady Increase in
Distribution Per Unit • 26.4% increase in distributions since inception
(1) Navios Maritime Partners fleet age weighted by DWT
(2) Source: Drewry’s as of April 2013
Strong Counterparties
Strong creditworthy counterparties (Mitsui,
Cosco, Rio Tinto, Cargill, Constellation etc.)
Insured Revenue Stream
Long-term contracts insured by:
• AA rated Insurance Company in the EU
• Sponsor, Navios Maritime Holdings Inc.
• Average charter duration is approx. 2.8 years
• Staggered charter-out expirations minimize
charter renewal risk
Company Highlights
www.navios-mlp.com
Appendix: Navios Partners Fleet
22
Owned Vessels
Vessels Type Built DWT Charter Rate ($)(1) Expiration Date(2) Dropdown
Navios Apollon Ultra-Handymax 2000 52,073 13,500 (3) 02/16/2014 Yes
Navios Soleil Ultra-Handymax 2009 57,337 8,906 12/23/2013
Navios TBN I Ultra-Handymax 2014 61,000 Expected Delivery Q1 2014
Navios Gemini S Panamax 1994 68,636 24,225 02/08/2014
Navios Libra II Panamax 1995 70,136 12,000 (3) 09/17/2015
Navios Felicity Panamax 1997 73,867 26,169 05/11/2013
Navios Galaxy I Panamax 2001 74,195 21,937 02/03/2018
Navios Helios Panamax 2005 77,075 9,738 09/27/2013
Navios Hyperion Panamax 2004 75,707 37,953 04/01/2014 Yes
Navios Alegria Panamax 2004 76,466 16,984 (4) 02/25/2014
Navios Orbiter Panamax 2004 76,602 38,052 04/01/2014 Yes
Navios Hope Panamax 2005 75,397 17,562 08/16/2013 Yes
Navios Sagittarius Panamax 2006 75,756 26,125 11/19/2018 Yes
Navios TBN II Panamax 2006 82,790 Expected Delivery Q4 2013
Navios TBN III Panamax 2005 76,619 Expected Delivery Q4 2013
Navios Fantastiks Capesize 2005 180,265 14,678 03/31/2014
Navios Aurora II Capesize 2009 169,031 41,325 11/24/2019 Yes
Navios Pollux Capesize 2009 180,727 42,250 07/24/2019 Yes
Navios Fulvia Capesize 2010 179,263 50,588 09/30/2015 Yes
Navios Melodia (5) Capesize 2010 179,132 29,356 (6) 09/19/2022 Yes
Navios Luz Capesize 2010 179,144 29,356 (7) 11/16/2020 Yes
Navios Buena Ventura Capesize 2010 179,259 29,356 (7) 10/28/2020 Yes
Navios TBN IV Capesize 2013 180,000 Expected Delivery Q4 2013
Total – 23 Vessels 2,500,477
Chartered-In Vessels
Vessels Type Built DWT Charter Rate ($)(1) Expiration Date(2) Purchase Option Dropdown
Navios Prosperity Panamax 2007 82,535 12,000 (8) 06/01/2013 Yes
Navios Aldebaran Panamax 2008 76,500 14,725 05/13/2013 Yes
Total – 2 Vessels 159,035
Total Fleet – 25 Vessels 2,659,512 DWT
(1) Daily charter-out rate net of commissions. These rates do not include insurance proceeds received upfront in December
2012
(2) Assumed midpoint of redelivery by charterers
(3) Profit sharing 50% on actual results above the base rates
(4) Profit sharing 50% above $16,984/day based on Baltic Panamax TC Average
(5) In January 2011, Korea Line Corporation (“KLC”) filed for receivership. The charter was affirmed and will be performed by
KLC on its original terms, provided that during an interim suspension period the sub-charterer pays Navios Partners
directly.
(6) Profit sharing 50% above $37,500/day based on Baltic Exchange Capesize TC Average
(7) Profit sharing 50% above $38,500/day based on Baltic Exchange Capesize TC Average
(8) Profit sharing: The owners will receive 100% of the first $1,500 in profits above the base rate and thereafter all profits will
be split 50% to each party.
www.navios-mlp.com