Navios 1Q Report
Navios Maritime Partners L.P. (NYSE: NMM), an owner and operator of Capesize and Panamax vessels, reported its financial results for the three month period March 31, 2009.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners, stated "We believe that Navios Partners is well positioned given the long-term employment of its fleet, averaging 4.1 years, the quality of its charter parties and the AA+ EU governmental agency insurance on all its charter-out contracts. The results of the first quarter of 2009 were in line with our expectations, and we have declared a $0.40 per unit cash distribution for the first quarter of 2009."
Frangou continued, "The globally coordinated fiscal stimulus programs are beginning to affect positively the dry bulk market; the BDI recovered from its low in December 2008 to a healthier steady state in the first quarter of 2009. We continue to have measured optimism as the concerted policy responses to the world-wide recession are gradually facilitating access to credit and easing constriction within markets."
Navios Partners received a lump sum charter payment of approximately $29.6 million for Navios Hope in the first quarter of 2009. This charter payment was net of expenses and represents an acceleration of a significant portion of the $56.2 million nominal charter amount. Navios Partners will receive the entire amount of the original charter through the lump sum payment and the new charter payments for the remainder of the term of the original charter (ending in 2013). The acceleration of the charter payment provides Navios Partners with a present value benefit of approximately $3.7 million.
On April 2, 2009, Navios Partners announced that it would not exercise the option to acquire TBN II, a new building capesize vessel, from Navios Holdings for $135 million. This decision was reached in light of the unfavorable conditions in the capital markets. There are no fees or costs payable in connection with the option expiration on April 1, 2009.
In January 2009, Navios Partners amended the terms of its existing credit facility. The company prepaid $40 million of its credit revolving facility in the first quarter of 2009. This would result in interest expense savings for 2009 of approximately $1.5 million (based on current interest rates) and a reduction in the company's leverage. The interest rate on the remaining facility of $195 million has a spread of 225 bps following the amendment. The amendment will be effective until January 15, 2010. No further principal payments would be required to be made until the first quarter of 2012.
The Board of Directors of Navios Partners declared a cash distribution for the first quarter of 2009 of $0.40 per unit. This distribution is payable on May 6, 2009 to all holders of record as of May 1, 2009.
Navios Partners has entered into long-term time charters-out for its nine active vessels with a remaining average term of 4.1 years, providing a stable base of revenue and distributable cash flow. Navios Partners has currently contracted out 100% of available days for 2009, 100% for 2010 and 80% for 2011 generating revenues of $118.2 million, $97.1 million and $82 million, respectively. The average contractual daily charter-out rate for the fleet is $34,081, $26,616 and $28,074 for 2009, 2010 and 2011, respectively. The average daily charter-in rate for the active long-term charter-in vessels for 2009 and 2010 is $13,513.
Navios Partners' charter-out contracts have been fully insured by an AA+ rated European Union governmental agency.
Navios Partners has entered into a five-year management agreement expiring in November 2012, with a subsidiary of Navios Holdings. Rates for the first two years (ending November 16, 2009) are fixed at (i) $4,000 per day for each owned Panamax vessel and (ii) $5,000 for each owned Capesize vessel.
Three month period ended March 31, 2009
For the three month period ended March 31, 2009, Navios Partners time charter and voyage revenue increased by $6.9 million or 48.2% to $21.2 million as compared to $14.3 million for the same period in 2008. The increase was mainly attributable to the delivery of Navios Aldebaran on March 17, 2008 and the acquisition of Navios Hope (ex Navios Aurora I) on July 1, 2008, both of which were fully operating during the three month period ended March 31, 2009. Time charter expenses for the three month period ended March 31, 2009 were $3 million and other expenses, including management fees and general and administrative expenses amounted to $3.4 million.
EBITDA increased by $5.5 million to $14.7 million for the three month period ended March 31, 2009 as compared to $9.2 million for the same period of 2008. This $5.5 million increase in EBITDA was primarily due to: (a) a $6.8 million increase in revenues as a result of the increased number of vessels in Navios Partners' fleet and some accelerated payments from the Navios Hope; and (b) a $0.1 million increase in other income/expense, net. The above overall favorable variance of $6.9 million was mitigated by: (a) a $0.2 million increase in time charter and voyage expenses; (b) a $0.8 million increase in management fees due to the increase in the number of vessels; and (c) a $0.4 million increase in general and administrative expenses due to the increase in the number of owned and chartered-in vessels during the three month period ended March 31, 2009, compared to the same period in 2008.
The increase in the reserve for estimated maintenance and replacement capital expenditures for the three month period ended March 31, 2009 and 2008 was $2 million and $2.1 million, respectively. There were no capital expenditures for the three month periods ended March 31, 2009 and 2008.
Navios Partners generated an operating surplus for the current period of $10.6 million in comparison to $7.2 million for the three month period ended March 31, 2008. 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).
Depreciation and amortization expense for the period (including amortization of drydocking and special survey costs presented under direct vessel expenses) was $3.4 million and interest expense and finance cost related to $195 million of borrowings under Navios Partners' facility agreement was $2.4 million.
Net income for three months ended March 31, 2009 amounted to $9 million compared to $3.8 million for the three months ended March 31, 2008. The increase in net income by $5.2 million was due to (a) a $5.5 million increase in EBITDA; (b) a $0.1 million increase in interest expense; and (c) a $0.1 million net increase from amortization expense and interest income. This increase was mitigated by a $0.5 million increase in depreciation and amortization expense.