Navios Maritime Q1 Results
Navios Maritime Holdings Inc. (NYSE:NM) , a global, vertically integrated seaborne shipping and logistics company, reported financial results for the first quarter ended March 31, 2010.
Angeliki Frangou, Chairman and CEO of Navios Holdings stated, "I am pleased with our performance thus far in 2010. During a period of continued uncertainty, Navios Holdings created liquidity from the sale of three vessels and used the sale proceeds to increase its cash reserves and deleverage. At the same time, Navios Holdings' stable business allowed the board to declare a dividend in respect of Q1 2010 of $0.06 per share."
Frangou continued, "We were pleased to announce that Navios Acquisition's shareholders approved the acquisition of a fleet of 13 product and chemical tankers. We believe that, in the long term, this acquisition will create significant value; our review of the industry led us to believe that Navios Acquisition is purchasing the fleet toward the low end of the cycle in a recovering and growing industry. As a result of our team's hard work in a difficult market, Navios Holdings ownership interest has a value well in excess of its aggregate cost."
On April 8, 2010, pursuant to the terms and conditions of the Acquisition Agreement by and between Navios Maritime Acquisition Corporation (NYSE:NNA) and Navios Holdings, Navios Acquisition will acquire 13 vessels (11 product tankers and two chemical tankers) plus options to purchase two additional product tankers, for an aggregate purchase price of $457.7 million, of which $334.3 million will be financed with debt and the remaining $123.4 million with existing cash. Each vessel will be commercially and technically managed under a management agreement with a subsidiary of Navios Holdings.
On May 25, 2010, Navios Acquisition announced that at a special meeting of stockholders, Navios Acquisition's stockholders approved (a) the acquisition of 13 vessels (11 product tankers and two chemical tankers) plus options to purchase two additional product tankers, for an aggregate purchase price of $457.7 million, of which $123.4 million will be from existing cash and the $334.3 million balance from debt financing, pursuant to the terms and conditions of the Acquisition Agreement by and between Navios Acquisition and Navios Holdings and (b) certain amendments to Navios Acquisition's amended and restated articles of incorporation.
Following the consummation of the transactions described in the Acquisition Agreement, Navios Holdings will be released from all debt and equity commitments for the above vessels and Navios Acquisition will reimburse Navios Holdings for the $38.8 million equity payments made prior to the stockholders meeting under the purchase contracts for the vessels plus all associated payments previously made by Navios Holdings.
During 2010, Navios Holdings received approximately $283.0 million ($263.0 million in cash and $20.0 million in common units) from the sale of three vessels to Navios Maritime Partners L.P. ("Navios Partners"). These transactions allowed Navios Holdings to monetize certain tangible and intangible assets while keeping a residual interest in the vessels through its ownership interest in Navios Partners. The vessels sold were the following:
-- Navios Pollux, Capesize vessel, sold on May 21, 2010 for $110.0 million in cash.
-- Navios Aurora II, Capesize vessel, sold on March 18, 2010 for $90.0 million in cash and 1,174,219 common units of Navios Partners.
-- Navios Hyperion, Panamax vessel, sold on January 8, 2010 for $63.0 million in cash.
In April 2010, Navios Holdings agreed to acquire a new build 180,000 dwt Capesize vessel for a price of $54.0 million. The vessel is under construction with a South Korean Shipyard and scheduled for delivery in January 2011. The vessel has been chartered out for ten years charter to a quality counter party for $24,674 (net) daily rate. It is anticipated that this charter will generate annual EBITDA of $7.1 million and cumulative EBITDA of $69.7 million (cumulative EBITDA over the life of the contract; daily operating expenses of $5,000 per day, growing at 3% annually).
On April 28, 2010, the Navios Vector, a 50,296 dwt Ultra-Handymax vessel and former long-term chartered-in vessel in operation, was delivered to Navios Holdings' owned fleet. Navios Vector acquisition cost was approximately $30.0 million and was partially financed through a $18.0 million facility and the remaining balance through existing cash.
Net Debt to Total Capitalization was 48.5% on March 31, 2010. Navios Holdings' total available liquidity, including bank lines, at March 31, 2010 was approximately $376.4 million. Navios Holdings has no unfunded capital expenditures for 2010. In addition, its debt maturities are anticipated less than $43.2 million and $89.5 million for 2010 and 2011, respectively.
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 12 years. As of May 26, 2010, Navios Holdings had contracted 96.0%, 69.7%, 56.4% and 46.8% of its available days on a charter-out basis for 2010, 2011, 2012 and 2013, respectively, equivalent to $299.4 million, $292.5 million, $265.0 million and $225.3 million in revenue, respectively. The average contractual daily charter-out rate for the core fleet is $27,222, $31,230, $32,876 and $33,551 for 2010, 2011, 2012 and 2013, respectively. The average daily charter-in rate for the active long-term charter-in vessels for 2010 is $10,095.
The above figures do not include vessels servicing the Contracts of Affreightment (COA) and Logistics businesses.
Navios Holdings controls a fleet of 59 vessels totaling 6.4 million dwt, of which 32 are owned and 27 are chartered-in under long-term charters. Navios Holdings currently operates 42 vessels (13 Capesize, 12 Panamax, 16 Ultra-Handymax and one Handysize product tanker vessel) totaling 4.1 million dwt and has scheduled 17 newbuildings to be delivered. These vessels are expected to be delivered at various dates through 2013. The average age of the operating fleet is 4.9 years.
Navios Partners Highlights
On May 12, 2010, Navios Holdings received $5.4 million, representing the cash distribution from Navios Partners for the first quarter of 2010.
On May 5, 2010, Navios Partners announced the completion of its follow-on public offering of 5,175,000 common units, which included the full exercise of the underwriters over-allotment option, at $17.84 per unit, raising gross proceeds of approximately $92.3 million.
-- EBITDA increased by 84.2% to $78.1 million in the first quarter of 2010 from $42.4 million in the same period in 2009.
-- Net income increased by 160.8% to $31.3 million in the first quarter of 2010 from $12.0 million in the same period in 2009.
-- Stockholders' equity increased by 5.0% to $972.1 million at March 31, 2010 compared to $925.5 million at December 31, 2009.
The Board of Directors declared a quarterly cash dividend for the first quarter of 2010 of $0.06 per share of common stock. This dividend is payable on July 7, 2010 to stockholders of record as of June 15, 2010. The declaration and payment of any further dividend remains subject to the discretion of the Board and will depend on, among other things, Navios Holdings' cash requirements as measured by market opportunities and restrictions under its credit agreements.
For the following results and the selected financial data presented herein, Navios Holdings has compiled consolidated statements of income for the three month periods ended March 31, 2010 and 2009. The information was derived from the unaudited 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 March 31, 2010 was $118.2 million as compared to $117.9 million for the same period during 2009. The slight increase in revenue was mainly attributable to the increase in the available days of the fleet by 8.1% to 4,194 days in the first quarter of 2010 from 3,880 days in the same period of 2009. This was partially offset by the decrease in Time Charter Equivalent ("TCE") per day by 13.4% to $24,484 per day in the first quarter of 2010 from $28,277 per day in the same period of 2009. The increase in the available days was mainly attributable to the increase by 699 days of the owned fleet available days following the delivery of ten owned vessels during the last three quarters of 2009 and the first quarter of 2010. This increase of available days was offset by a decrease in short and long term fleet available days by 306 days and 79 days, respectively.
Revenue from the logistics business was approximately $36.2 million for the three months ended March 31, 2010 as compared to $29.3 million during the same period of 2009. This increase was mainly attributable to the acquisition of Makenita H, which was fully operational during the second half of 2009 only, to the increased operations of its liquid port and to the increased storage capacity of its dry port in Uruguay following the construction of its new silo.
EBITDA for the three months ended March 31, 2010 increased by $35.7 million to $78.1 million compared to $42.4 million for the first quarter of 2009. The $35.7 million increase in EBITDA was primarily due to an increase in revenue by $7.2 million to $154.4 million in the first quarter of 2010 from $147.2 million in the same period of 2009, a decrease in time charter, voyage and logistic business expenses by $4.6 million from $91.8 million in the first quarter of 2009 to $87.2 million in the same period in 2010, an increase in equity in net earnings from affiliated companies by $6.4 million, an increase in gain on sale of assets by $24.4 million and an increase in noncontrolling interests by $1.3 million. This overall variance of $43.9 million was offset by an increase in losses from derivatives by $1.8 million, an increase in direct vessel expenses (excluding the amortization of deferred dry dock and special survey costs) by $2.1 million, an increase in general and administrative expenses by $1.7 million (excluding share based compensation expenses), and an increase in net other expenses by $2.6 million.
EBITDA of Navios Logistics was $4.1 million for the three months ended March 31, 2010 as compared to $5.8 million during the same period in 2009.
Net income for the three months ended March 31, 2010 was $31.3 million as compared to $12.0 million for the comparable period of 2009. The increase of net income by $19.3 million was mainly due to the increase by $35.7 million of EBITDA discussed above, and $0.1 million increase in income tax gain. These were mitigated by an increase of depreciation and amortization by $9.4 million and the increase in net interest expense by $7.1 million.