Navios 3Q, 9 Mo. Report

Thursday, November 20, 2008

Navios Maritime Holdings Inc. (NYSE:NM) , a global, vertically integrated seaborne shipping and logistics company, today reported financial results for the third quarter and nine months ended September 30, 2008.

"We believe that Navios' flexible business model and conservative strategy will benefit us during this difficult period in the drybulk market," stated Angeliki Frangou Chairman and CEO of Navios Holdings. "Consistent with past practices, we entered into long-term charters-out and, as a result, our core fleet is 82% covered for 2009 and 59% covered for 2010. We have also taken steps to preserve capital by cancelling 12 unfixed vessels."

Ms. Frangou continued, "We are paying dividends for the third quarter of $0.09 per share. We remain committed to returning capital to shareholders while allowing for future growth. We have increased the share repurchase program by $25.0 million and intend to maintain a quarterly dividend of $0.06 per share, commencing with the fourth quarter of 2008.

Cancellation of Three Unfixed Capesize Newbuildings:
In November 2008, Navios Holdings cancelled three Capesize vessels scheduled for delivery to Navios Holdings' owned fleet in Q4 2009 and Q1 2010. These vessels had not been chartered-out, and the cancellation will result in capital expenditure savings of $265.0 million. Installments already paid to the shipyard were applied towards future payments on three other Capesize vessels under construction with the same shipyard in South Korea. The cancellation fee was $1.5 million in total.

In October 2008, Navios Holdings cancelled six Kamsarmax vessels scheduled for delivery in 2010 and 2011 to Navios Holdings' long-term charter-in fleet. In November 2008, Navios Holdings also cancelled three Handysize vessels scheduled for delivery to Navios Holdings' long-term charter-in fleet in 2010 and 2011. These vessels had not been chartered out, and the cancellation will result in annual savings of $61.0 million. All cancellations were at no cost.

Financing:
In November 2008, Navios Holdings entered into a new revolving credit facility of up to $90.0 million. The facility can be used for general corporate purposes. As of November 17, 2008, no amount had been drawn under this facility.

Dividend Policy:
On November 14, 2008, the Board of Directors declared a quarterly cash dividend with respect to the third quarter of 2008 of $0.09 per share of common stock. This dividend is payable on January 6, 2009, to stockholders of record as of December 22, 2008.

The Board revised our dividend policy for the fourth quarter of 2008 and subsequent periods to $0.06 per share ($0.24 per share annually). Our board of directors may amend our dividend policy from time to time in light of our capital needs, among other factors. The amount of dividends we can pay is also limited by our credit agreements.

Share Repurchase Program:
In October 2008 Navios Holdings completed a $50.0 million share repurchase program of Navios Holdings' common stock, as approved by the Board of Directors on February 14, 2008. A total of 6,959,290 shares were repurchased under this program.

In November 2008, the Board of Directors approved a share repurchase program authorizing the purchase of up to $25.0 million of Navios Holdings' common stock pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act. The program does not require any minimum purchase or any specific number or amount of shares and may be suspended or reinstated at any time in Navios Holdings' discretion and without notice.

Warrant Exercises:
During the nine months ended September 30, 2008, Navios Holdings issued 1,349,868 shares of common stock following the exercise of warrants. The exercise of these warrants generated $6.7 million of cash proceeds. As of September 30, 2008, Navios Holdings had 102,989,458 shares of common stock outstanding and 6,452,837 warrants remaining outstanding. As of November 17, 2008, Navios Holdings had 100,816,958 shares of common stock outstanding and 6,451,337 warrants remaining outstanding. The warrants expire in accordance with their terms on December 9, 2008.

Sale of Navios Aurora I:
On July 1, 2008, Navios Holdings sold the Navios Aurora I, a 75,397 dwt Panamax vessel built in 2005, to Navios Maritime Partners L.P. ("Navios Partners") for approximately $80.0 million, consisting of $35.0 million cash and 3,131,415 common units. The number of the common units issued was calculated using the $14.3705 volume weighted average trading price for the 10 business days immediately before the closing date. Following the sale of Navios Aurora I, Navios Holdings owns a 51.6% equity interest in Navios Partners which includes 2% general partner interest.

Acquisition of Vessels:
In October 2008, Navios Holdings took delivery of Navios Ulysses, a 2007 built, 55,728 dwt Ultra Handymax vessel built in Japan. The total acquisition price of the vessel amounted to $79.6 million. The vessel commenced a five-year time charter at a net daily rate of $31,281.

Update on Navios Maritime Acquisition Corporation:
The initial public offering of Navios Maritime Acquisition Corporation closed on July 1, 2008. The offering raised gross proceeds of $253.0 million. The units, common stock and warrants trade on the NYSE under the symbols NNA.U, NNA, and NNA WS, respectively. Navios Holdings has a 19% ownership position in Navios Maritime Acquisition Corporation. In addition, Navios Holdings has purchased 7.6 million warrants for $1 per warrant.

Update on Navios South American Logistics:
Navios South American Logistics Inc. ("Navios Logistics") completed its acquisition program of six push boats, 108 dry barges and three self-propelled barges anticipated to be fully operational sometime during the fourth quarter of 2008. Navios Logistics also took delivery of Estefania H on July 25, 2008, a 12,000 dwt product tanker, built in 2008 which was employed as of August 2, 2008 in the Argentinean cabotage business.

Navios Logistics began construction of a new silo at its port facility in Uruguay. The silo is expected to be fully operational by April 2009 in time for the new crop season and will add an additional 80,000 metric tons of storage capacity. The project is fully funded by Navios Logistics' internally generated cash.

Financial Highlights
Throughout this press release, "Adjusted EBITDA" for the three and nine months ended September 30, 2008 and 2007 is defined as EBITDA, excluding unrealized losses from marked-to-market valuations of sponsor warrants acquired as part of the initial public offering of Navios Maritime Acquisition Corporation.
•    Revenues increased by 74% to $371.3 million in the third quarter of 2008 from $212.9 million in the same period in 2007
•    Adjusted EBITDA increased by 1% to $58.6 million in the third quarter of 2008 from $57.9 million for the same period in 2007
•    Adjusted EBITDA increased by 6% to $142.7 million in the nine months ended September 30, 2008 from $135.1 million for the same period in 2007
•    Net debt to book capitalization was 40.0% at September 30, 2008 compared with 7.4% at December 31, 2007
•    Stockholders' Equity increased by 7.4% to $825.8 million at September 30, 2008 compared with $769.2 million at December 31, 2007

For the following results and the selected financial data presented herein, Navios Holdings has compiled consolidated statement of income for the three and nine month periods ended September 30, 2008 and 2007. The quarterly and nine month period 2008 and 2007 information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA is a non-US GAAP financial measure and should not be used in isolation or substitution for Navios Holdings' results.

Revenue from vessel operations for the three months ended September 30, 2008 was $337.7 million as compared to $210.1 million for the same period during 2007. The increase in revenue is mainly attributable to the increase in Time Charter Equivalent ("TCE") per day and the increase in the available days of the fleet in 2008 as compared to 2007. The achieved TCE rate per day, excluding FFAs, increased 59.9% from $31,122 per day in the third quarter of 2007 to $49,769 per day in the same period of 2008. The available days for the fleet increased by 15.9% to 6,036 in the third quarter of 2008 from 5,207 days in the same period of 2007.

Revenue from the logistics business was approximately $33.6 million for the three months ended September 30, 2008 as compared to $2.8 million during the same period of 2007. This is due to the acquisition of Horamar Group in January 2008.

EBITDA for the third quarter of 2008 and 2007 was $57.0 million and $57.9 million, respectively. Adjusted EBITDA for the third quarter of 2008 and 2007 was $58.6 million and $57.9 million, respectively. Adjusted EBITDA reflects EBITDA adjusted for the effect of the unrealized losses on warrants acquired as part of the initial public offering of Navios Acquisition. The increase in Adjusted EBITDA of $0.7 million was primarily due to an increase in revenue by $158.4 million from $212.9 million in the third quarter of 2007 to $371.3 million for the same period in 2008, a decrease in direct vessel expenses (excluding the amortization of deferred dry dock and special survey costs) by $0.6 million from $6.7 million in the third quarter of 2007 to $6.1 million for the same period in 2008, an increase in equity in net earnings from affiliated companies by $3.6 million and an increase in gain on sale of assets by $24.9 million, due to the sale of vessel Navios Aurora I to Navios Partners. This overall favorable variance of $187.5 million was mitigated mainly by a decrease in gain of FFA trading by $5.0 million from $10.2 million for the third quarter of 2007 to $5.2 million for the same period in 2008, an increase in time charter, voyage and logistic business expenses by $174.8 million from $154.2 million in the third quarter of 2007 to $329.0 million for the same period in 2008, an increase in general and administrative expenses by $4.5 million from $5.0 million in the second quarter of 2007 to $9.5 million for the same period in 2008 (excluding the $0.7 million share-based compensation for the second quarter of 2008), a decrease of $0.7 million relating to interest income from finance leases, an increase in minority interest of $0.9 million and an increase in net other expenses (excluding unrealized losses on warrants) of $0.9 million.

Net income for the third quarter ended September 30, 2008 was $30.7 million as compared to $36.5 million for the comparable period in 2007. The decrease of Net income by $5.8 million was mainly affected by a $6.0 million increase in depreciation and amortization expense mainly due to the purchase price allocation from the acquisition of Horamar, a $1.1 million decrease in interest income, a $0.1 million increase in amortization of drydock and special survey, the unrealized losses on warrants of $1.6 million and a $0.7 million increase in share-based compensation expense. This was mitigated by a $0.7 million increase in Adjusted EBITDA, the $1.1 million decrease in interest expense and the $1.9 million decrease in income taxes.

Revenue from vessel operations for the nine months ended September 30, 2008 was $983.4 million as compared to $442.2 million for the same period during 2007. The increase in revenue is mainly attributable to the increase in TCE per day and the increase in the available days of the fleet in 2008 as compared to 2007. The achieved TCE rate per day, excluding FFAs, increased 87.0% from $25,561 per day in the first nine months of 2007 to $47,798 per day in the same period of 2008. The available days for the fleet increased by 37.4% to 18,040 days in the first nine months of 2008 from 13,125 days in the same period of 2007.

Revenue from the logistics business was approximately $80.5 million in the first nine months of 2008 as compared to $7.7 million during the same period of 2007. This is due to the acquisition of Horamar group in January 2008.

EBITDA for the first nine months of 2008 and 2007 was $141.1 million and $135.1 million, respectively. Adjusted EBITDA for the first nine months of 2008 and 2007 was $142.7 million and $135.1 million, respectively. Adjusted EBITDA reflects EBITDA adjusted for the effect of the unrealized losses on warrants acquired as part of the initial public offering of Navios Acquisition. The increase in Adjusted EBITDA of $7.6 million was primarily due to an increase in revenue by $614.1 million from $449.9 million in nine months ended September 30, 2007 to $1,064 million for the same period in 2008, a decrease in direct vessel expenses (excluding the amortization of deferred dry dock and special survey costs) by $2.1 million from $19.8 million in the first nine months of 2007 to $17.7 million for the same period in 2008, an increase in equity in net earnings from affiliated companies by $10.8 million, a gain of $27.7 million from the sale of assets in the first nine months of 2008. This overall favorable variance of $654.7 million was mitigated mainly by the decrease in gain of FFA trading by $3.8 million from $20.3 million for the first nine months of 2007 to $16.5 million for the same period in 2008, the increase in time charter, voyage and logistic business expenses by $625.1 million from $304.6 million in the first nine months of 2007 to $929.7 million for the same period in 2008, an increase in general and administrative expenses by $12.6 million from $14.1 million in the first nine months of 2007 to $26.7 million for the same period in 2008 (excluding the $2.2 million share-based compensation for the first nine months of 2008), an increase in minority interest by $2.7 million and a decrease of $2.9 million in net other expenses (including interest income from finance leases and excluding unrealized losses on warrants).

Net income for the first nine months of 2008 was $124.1 million as compared to $74.5 million for the comparable period in 2007. Net income for the first nine months of 2008 includes a $57.3 million write-off of deferred Belgian taxes. Adjusting for this item, net income for the first nine months of 2008 would have been $66.8 million. The decrease of Adjusted Net income by $7.7 million was mainly affected by a $19.8 million increase in depreciation and amortization expense mainly due to the purchase price allocation from the acquisition of Horamar, a $0.1 million increase in amortization of deferred drydock and special survey, the unrealized losses on warrants of $1.6 million and a $2.2 million increase in share-based compensation expense. This was mitigated by a $7.6 million increase in Adjusted EBITDA, the increase in interest income by $1.4 million, the $2.7 million decrease in interest expense and the $4.3 million decrease in income taxes.

Time Charter Coverage:
Navios Holdings has extended its long-term fleet employment by entering into agreements to charter out vessels for periods ranging from one to ten years. As a result, as of November 17, 2008, Navios Holdings has currently contracted 100.0%, 81.8% and 59.3% of its available days on a charter-out basis for 2008, 2009 and 2010, respectively, equivalent to $220.0 million, $232.7 million and $260.8 million in revenue, respectively. The average contractual daily charter-out rate for the core fleet is $24,744, $28,515 and $35,917 for 2008, 2009 and 2010, respectively. The average daily charter-in rate for the active long term charter-in vessels for 2008 is $9,727.

Navios Holdings has options to acquire four of the 17 chartered-in vessels currently in operation within the next two years (two Ultra-Handymaxes, one Panamax and one Capesize) and eight of the 11 long-term chartered-in vessels on order (on two of the 12 purchase options Navios Holdings holds a 50% initial purchase option).

Fleet Profile:
Navios Holdings controls a fleet of 53 vessels totaling 5.1 million dwt, of which 25 are owned and 28 are chartered-in under long term charters. The company currently operates 34 vessels totaling 2.6 million dwt and has 19 newbuildings to be delivered. These vessels are expected to be delivered at various dates through 2013. The average age of the operating fleet is 4.6 years.

(www.navios.com)

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