Navios Maritime Partners Results for Q2 2010

Wednesday, July 28, 2010

Navios Maritime Partners L.P. (NYSE: NMM), an owner and operator of dry cargo vessels, reported its financial results for the second quarter and six months ended June 30, 2010.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners, stated: "I am pleased with our performance during the second quarter. We raised $92.3 million in the equity markets and purchased the Navios Pollux. The acquisition of the Navios Pollux increases the average charter coverage of our fleet to 4.4 years and reduces the average age of our fleet to 5.7 years. We have also increased our quarterly distributions by 1.2% to $0.42 per unit for the second quarter of 2010, representing an aggregate increase of 2.4% in 2010."

Throughout this release, EBITDA for the three and six months ended June 30, 2009 represents net income before interest, depreciation and amortization and before non-cash consideration for the release of the obligation to acquire the Navios Bonavis.

RECENT DEVELOPMENTS
Increase in Cash Distributions
The Board of Directors of Navios Partners declared a cash distribution for the second quarter of 2010 of $0.42 per unit. This represents an increase of 1.2% from the cash distribution of $0.415 per unit declared in the first quarter of 2010. The distribution is payable on August 12, 2010 to holders of record on August 9, 2010.

Vessel acquisition
On May 21, 2010, Navios Partners purchased from Navios Holdings the vessel Navios Pollux, a 180,727 dwt Capesize vessel built in 2009, for a price of $110.0 million. Navios Pollux has been chartered out at a net rate of $42,250 per day until July 2019. The annual EBITDA is expected to be approximately $13.2 million.

Following the acquisition of Navios Pollux, Navios Partners' operational fleet consists of 14 drybulk vessels comprised of one Ultra-Handymax, three Capesize and ten Panamax vessels. The fleet has a total capacity of approximately 1.3 million dwt and an average age of approximately 5.7 years.
Navios Alegria Charter Party

The company has entered a new charter party agreement for Navios Alegria at a net rate of $16,984 plus profit sharing of 50% above the rate of $16,984 per day based on Baltic Panamax TC Average, calculated and settled every 15 days. The term of this charter party is three years commencing in January 2011.
Completion of Offering of 5,175,000 Common Units raising $92.3 million gross proceeds

On May 5, 2010, Navios Partners completed its public offering of 4,500,000 common units at $17.84 per unit and raised gross proceeds of approximately $80.3 million to fund its fleet expansion. The net proceeds of this offering were approximately $76.7 million. On the same date, the overallotment option was exercised resulting in the issuance of 675,000 additional common units, raising additional gross proceeds of $12.0 million and net proceeds of approximately $11.5 million. Pursuant to this offering, Navios Partners issued 105,613 additional general partnership units to its General Partner raising net proceeds of $1.8 million.

Credit Facility
On June 1, 2010, Navios Partners borrowed an additional $35.0 million under a new tranche to its existing credit facility ("Credit Facility") to partially finance the acquisition of Navios Pollux. The amendment provides for, among other things, a new margin ranging from 1.45% to 1.80% depending on the applicable loan to value ratio.

Long Term and Insured Cash Flow
Navios Partners has entered into long-term time charter-out agreements for all 14 vessels with a remaining average term of 4.4 years, providing a stable base of revenue and distributable cash flow. Navios Partners has currently contracted out 100.0% for 2010, 92.9% for 2011 and 88.3% for 2012 generating revenues of approximately $139.8 million, $140.4 million and $135.5 million, respectively. The average contractual daily charter-out rate for the fleet is $28,633, $29,598 and $29,939 for 2010, 2011 and 2012, respectively. The average daily charter-in rate for the active long-term charter-in vessels for 2010 is $13,449.

Navios Partners' charter-out contracts have been insured by an AA+ rated European Union governmental agency.

Three month period ended June 30, 2010
Time charter and voyage revenues for the three month period ended June 30, 2010 increased by $11.1 million or 50.0% to $33.3 million as compared to $22.2 million for the same period in 2009. The increase was mainly attributable to the acquisitions of the rights to the Navios Sagittarius in June 2009 and the acquisition of the Navios Apollon on October 29, 2009, the Navios Hyperion on January 8, 2010, the Navios Aurora II on March 18, 2010 and the Navios Pollux on May 21, 2010.

EBITDA increased by $9.4 million to $24.6 million for the three month period ended June 30, 2010 as compared to $15.2 million for the same period of 2009. This $9.4 million increase in EBITDA was due to (a) $11.1 million increase in revenue as a result of the delivery into Navios Partners' fleet of Navios Sagittarius in June 2009, Navios Apollon in October 2009, Navios Hyperion in January 2010, Navios Aurora II in March 2010 and Navios Pollux in May 2010; and (b) a $0.4 million decrease in time charter and voyage expenses as a result of the exercise of the purchase option of Navios Sagittarius which was owned on January 12, 2010, and to off hire charges during the second quarter of 2010. The above increase was mitigated by a $2.1 million increase in management fees as a result of the increased number of vessels in Navios Partners' fleet.

The reserve for estimated maintenance and replacement capital expenditures for the three month periods ended June 30, 2010 and 2009 was $3.6 million and $2.0 million, respectively. Expansion capital expenditures reserve for the three month periods ended June 30, 2010 and 2009 was $110.0 million and $34.6, respectively (please see Reconciliation of Non-GAAP Financial Measures on Exhibit 3).

Navios Partners generated Operating Surplus for the three month period ended June 30, 2010 of $34.4 million in comparison to $11.4 million for the three month period ended June 30, 2009. Operating Surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of Navios Partners and other master limited partnerships (please see Reconciliation of Non-GAAP Financial Measures on Exhibit 3).

Net income for the three months ended June 30, 2010 amounted to $13.2 million compared to $3.6 million for the three months ended June 30, 2009. The increase in net income by $9.6 million was due to: (a) a $9.4 million increase in EBITDA; (b) a $6.1 million non-cash compensation expense incurred during the three months ended June 30, 2009; (c) a $0.4 million decrease in interest expense; (d) a $0.1 million increase in interest income; and (e) a $0.1 million decrease in direct vessel expenses. The overall increase of $16.1 million was partly offset by a $6.5 million increase in depreciation and amortization expense due to the acquisition of the Navios Sagittarius, Navios Apollon, Navios Hyperion, Navios Aurora II and Navios Pollux and the favorable lease terms recognized in relation to these acquisitions.

Six month period ended June 30, 2010
Time charter and voyage revenues for the six month period ended June 30, 2010 increased by $19.4 million or 44.8% to $62.7 million as compared to $43.3 million for the same period in 2009. The increase was mainly attributable to the acquisition of the rights to the Navios Sagittarius in June 2009 and the acquisition of the Navios Apollon on October 29, 2009, the Navios Hyperion on January 8, 2010, the Navios Aurora II on March 18, 2010 and the Navios Pollux on May 21, 2010.

EBITDA increased by $16.0 million to $45.9 million for the six month period ended June 30, 2010 as compared to $29.9 million for the same period of 2009. This $16.0 million increase in EBITDA was due to: (a) a $19.3 million increase in revenue as a result of the delivery into Navios Partners' fleet of Navios Sagittarius in June 2009, Navios Apollon in October 2009, Navios Hyperion in January 2010, Navios Aurora II in March 2010 and Navios Pollux in May 2010; and (b) a $0.5 million decrease in time charter and voyage expenses as a result of the exercise of the purchase option of Navios Sagittarius which was owned on January 12, 2010, and to off hire charges during the first six months of 2010. The above increase was mitigated by (a) a $3.6 million increase in management fees as a result of the increased number of vessels in Navios Partners' fleet; and (b) a $0.2 million increase in general and administrative expenses.

The reserve for estimated maintenance and replacement capital expenditures for the six month periods ended June 30, 2010 and 2009 was $6.9 million and $3.9 million, respectively. Expansion capital expenditures reserve for the six month periods ended June 30, 2010 and 2009 was $285.8 million and $34.6 million, respectively (please see Reconciliation of Non-GAAP Financial Measures on Exhibit 3).

Navios Partners generated Operating Surplus for the six month period ended June 30, 2010 of $52.2 million in comparison to $22.0 million for the six month period ended June 30, 2009. Operating Surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of Navios Partners and other master limited partnerships (please see Reconciliation of Non-GAAP Financial Measures on Exhibit 3).

Net income for the six months ended June 30, 2010 amounted to $25.8 million compared to $12.6 million for the six months ended June 30, 2009. The increase in net income by $13.2 million was due to: (a) a $16.0 million increase in EBITDA; (b) a $6.1 million non-cash compensation expense incurred during the six months ended June 30, 2009; (c) a $1.6 million decrease in interest expense; (d) a $0.2 million increase in interest income; and (e) a $0.2 million decrease in direct vessel expenses. The overall increase of $24.1 million was partly offset by a $10.9 million increase in depreciation and amortization expense due to the acquisition of the Navios Sagittarius, Navios Apollon, Navios Hyperion, Navios Aurora II and Navios Pollux and the favorable leases terms that were recognized in relation to these acquisitions.

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