Navios Maritime Q4, Year End Results

Tuesday, January 25, 2011

Navios Maritime Partners L.P. (NYSE: NMM), an owner and operator of dry cargo vessels, reported its financial results for the fourth quarter and year ended December 31, 2010. Ms. Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners, stated: "We are pleased to increase our cash distribution per unit for the fourth quarter. This is the third increase in the last four quarters, and the $0.43 per unit distribution represents an increase of approximately 5% over the fourth quarter of 2009."
Ms. Frangou continued, "Overall, 2010 was a good year for Navios Partners.  We grew the asset base substantially by adding 5 new vessels, all with long-term charters.  At the same time, we reduced our leverage ratios. As we look forward, we believe that Navios Partners is well positioned for growth, and we will continue to pursue opportunities with the goal of growing our asset base, cash flow and distribution."

RECENT DEVELOPMENTS
Increase in Cash Distributions
The Board of Directors of Navios Partners declared a cash distribution for the fourth quarter of 2010 of $0.43 per unit. This represents an increase of 2.4% from the cash distribution of $0.42 per unit declared for the third quarter of 2010. The distribution is payable on February 14, 2011 to holders of record on February 9, 2011. 
Vessel Acquisitions
On November 15, 2010, Navios Partners purchased from Navios Maritime Holdings Inc. ("Navios Holdings") two vessels with attached charter-out agreements: the Navios Melodia, a 179,132 dwt Capesize vessel built in 2010, for a price of $78.8 million, and the Navios Fulvia, a 179,263 dwt Capesize vessel built in 2010, for a price of $98.2 million.  The Navios Melodia has been chartered-out at a net rate of $29,356 per day until September 2022, contributing an annualized EBITDA of approximately $8.4 million. Navios Fulvia has been chartered-out at a net rate of $50,588 per day until September 2015, contributing an annualized EBITDA of approximately $16.0 million. 
Following the acquisitions of the Navios Melodia and Navios Fulvia, Navios Partners' operational fleet consists of 16 drybulk vessels comprised of one Ultra-Handymax, five Capesize and ten Panamax vessels.  The fleet has a total capacity of approximately 1.7 million dwt and an average age of approximately 5.0 years.
Credit Facility
On December 15, 2010, Navios Partners entered into an amendment to its existing credit facility ("Credit Facility") and borrowed an additional $50.0 million under a new tranche to partially finance the acquisitions of the Navios Melodia and Navios Fulvia. The amendment provides for, among other things, a new interest rate margin ranging from 1.65% to 1.95% depending on the applicable loan to value ratio, improved amortization profile with a repayment schedule that begins in February 2011 and reduction of minimum liquidity by approximately $20.0 million.
Long-Term and Insured Cash Flow
Navios Partners has entered into long-term time charter-out agreements for all 16 vessels with a remaining average term of 4.6 years, providing a stable base of revenue and distributable cash flow.   Navios Partners has currently contracted out 100.0% for 2011, 94.7% for 2012 and 75.1% for 2013, generating revenues of approximately $176.6 million, $170.1 million and $133.9 million, respectively. The average contractual daily charter-out rate for the fleet is $30,248, $30,669 and $32,560 for 2011, 2012 and 2013, respectively.  The average daily charter-in rate for the active long-term charter-in vessels for 2011 is $13,513.
Navios Partners' charter-out contracts are insured by an AA+ rated European Union governmental agency.

Three month periods ended December 31, 2010 and 2009
Time charter and voyage revenues for the three month period ended December 31, 2010 increased by $16.9 million or 66.0% to $42.5 million, as compared to $25.6 million for the same period in 2009. The increase was mainly attributable to the acquisitions of the Navios Apollon on October 29, 2009, the Navios Hyperion on January 8, 2010, the Navios Aurora II on March 18, 2010, the Navios Pollux on May 21, 2010 and the Navios Melodia and Navios Fulvia on November 15, 2010. As a result of the vessel acquisitions, available days of the fleet increased to 1,381 days for the three month period ended December 31, 2010, as compared to 983 days for the same period in 2009.
Adjusted EBITDA increased by $14.4 million or 80.9% to $32.2 million for the three month period ended December 31, 2010 as compared to $17.8 million for the same period of 2009. This $14.4 million increase in EBITDA was due to: (a) a $16.9 million increase in revenue as a result of the acquisitions of the Navios Apollon in October 2009, the Navios Hyperion in January 2010, the Navios Aurora II in March 2010, the Navios Pollux in May 2010, and the Navios Melodia and Navios Fulvia in November 2010; and (b) a $0.6 million decrease in time charter and voyage expenses, mainly as a result of the exercise of the purchase option of the Navios Sagittarius which became part of the owned fleet on January 12, 2010. The above increase was partially offset by a $2.6 million increase in management fees and a $0.5 million increase in general and administrative expenses 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 December 31, 2010 and 2009 was $4.0 million and $2.1 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3). Expansion capital expenditures for each of the three month periods ended December 31, 2010 and 2009 was $162.0 million and $34.5 million, respectively.
Navios Partners generated an Operating Surplus for the three month period ended December 31, 2010 of $27.1 million, as compared to $14.3 million for the three month period ended December 31, 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 in Exhibit 3).
Net income for the three months ended December 31, 2010 amounted to $18.4 million compared to $11.0 million for the three months ended December 31, 2009. The increase in net income by $7.4 million was due to: (a) a $14.4 million increase in Adjusted EBITDA; (b) a $0.3 million increase in interest income; and (c) a $0.2 million decrease in interest expense, and was partially offset by a $7.6 million increase in depreciation and amortization expense due to the acquisition of the Navios Sagittarius, the Navios Apollon, the Navios Hyperion, the Navios Aurora II, the Navios Pollux, the Navios Melodia and the Navios Fulvia and the favorable lease terms recognized in relation to these acquisitions.
Years ended December 31, 2010 and 2009
Time charter and voyage revenues for the year ended December 31, 2010 increased by $50.6 million or 54.6% to $143.2 million as compared to $92.6 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, the Navios Pollux on May 21, 2010 and the Navios Melodia and Navios Fulvia on November 15, 2010. As a result of the vessels' acquisitions, available days of the fleet increased to 4,879 days for the year ended December 31, 2010, as compared to 3,553 days for the same period in 2009.
Adjusted EBITDA increased by $42.6 million or 66.0% to $107.1 million for the year ended December 31, 2010, as compared to $64.5 million for the same period of 2009. This $42.6 million increase in Adjusted EBITDA was due to: (a) a $50.6 million increase in revenue as a result of the acquisition of the rights to the Navios Sagittarius in June 2009 and the acquisition of the Navios Apollon in October 2009, the Navios Hyperion in January 2010, the Navios Aurora II in March 2010, the Navios Pollux in May 2010 and the Navios Melodia and the Navios Fulvia in November 2010; and (b) a $1.9 million decrease in time charter and voyage expenses as a result of the exercise of the purchase option of the Navios Sagittarius which became part of the owned fleet on January 12, 2010. The above increase was partially offset by: (a) a $8.7 million increase in management fees as a result of the increased number of vessels in Navios Partners' fleet; and (b) a $1.1 million increase in general and administrative expenses.
The reserve for estimated maintenance and replacement capital expenditures for the years ended December 31, 2010 and 2009 was $14.7 million and $8.0 million, respectively. Expansion capital expenditures for the year ended December 31, 2010 and 2009 was $447.8 million and $69.1 million, respectively.
Navios Partners generated an Operating Surplus for the year ended December 31, 2010 of $87.6 million in comparison with $49.2 million for the year ended December 31, 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.
Net income for the year ended December 31, 2010 amounted to $60.5 million compared to $34.3 million for the year ended December 31, 2009. The increase in net income by $26.2 million was due to: (a) a $42.6 million increase in Adjusted EBITDA; (b) a $6.1 million non-cash compensation expense incurred during the year ended December 31, 2009; (c) a $1.7 million decrease in interest expense; (d) a $0.8 million increase in interest income; and (e) a $0.3 million decrease in direct vessel expenses. The overall increase of $51.5 million was partially offset by a $25.3 million increase in depreciation and amortization expense due to the acquisition of the Navios Sagittarius, the Navios Apollon, the Navios Hyperion, the Navios Aurora II, the Navios Pollux, the Navios Melodia and the Navios Fulvia and the favorable lease terms that were recognized in relation to these acquisitions.
 

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