Navios Maritime Partners L.P, an international owner and operator of dry cargo and tanker vessels, today reported its financial results for the first quarter ended March 31, 2022.
Angeliki Frangou, Chairwoman and Chief Executive Officer of Navios Partners stated, “I am pleased with the results for the first quarter of 2022. During the first quarter of 2022, Navios Partners recorded revenue of $236.6 million, EBITDA of $126.1 million and net income of $85.7 million, or $2.78 earnings per common unit.”
Angeliki Frangou continued, “We stand at the crossroads of a war in Ukraine, rising interest rates and a zero-Covid policy in China. There is no crystal ball to understand how this will evolve. In the meantime, governments and companies are quick to act to satisfy their short term needs as they consider long-term policies in light of these uncertainties.”
Angeliki Frangou also stated, “We believe our diversified structure offers the opportunity for continuous accretive growth. As previously announced, this quarter we agreed to acquire four Aframax / LR2 tankers on the back of charter commitments from an investment grade counterparty. These vessels are designed with the latest technology and can carry either crude or products. Through this transaction, we entered a new sub-segment with reduced risk and excellent long-term prospects.”
Fleet Update
• Acquisition of four 115,000 dwt /LR2 Newbuilding vessels in April 2022
In April 2022, Navios Partners agreed to purchase four 115,000 dwt /LR2 newbuilding vessels for a purchase price of $58.5 million each (plus $4.2 million in additional features). The vessels have been designed with the latest technology to optimize efficiency. They are expected to be delivered into Navios Partners’ fleet during 2024 and the first quarter of 2025. The closing of the transaction is subject to completion of customary documentation.
$185 million Secured Long-term Time Charters for four vessels
Navios Partners has secured new long-term time charters for four vessels which are expected to generate approximately $185 million of contracted revenue.
• Two 115,000 dwt /LR2 newbuilding vessels, expected to be delivered in 2024, have been chartered-out for an average period of 60 months, at a net rate of $25,576 per day. The charterer has an option to extend the charter for a further five one-year options at rates increasing by $1,234 per day each year. In addition, the charterer has the option to charter one or both of the two additional tanker vessels on identical terms. The option can be exercised by mid October 2022.
• One 310,000 dwt newbuilding VLCC expected to be delivered in second half 2022, has been bareboat chartered-out for an average period of 22 months, at a floating rate on adjusted TD3C-WS with a floor of $22,572 net per day and ceiling of $29,700 net per day.
• One 4,250 TEU containership has been chartered-out for an average period of 62 months, at an average net rate of $40,743 per day (2.0x the current average contracted net rate of $20,845).
Following the above charters, Navios Partners has $2.8 billion in contracted revenue through 2031.
Financing Update
On May 9, 2022, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $25.2 million in order to refinance existing indebtedness and for working capital purposes. The credit facility: (i) has an amortization profile of approximately six years; (ii) matures in the second quarter of 2027; and (iii) bears interest at Term Secured Overnight Financing Rate (SOFR) plus credit adjustment spread plus 250 bps per annum.
On March 28, 2022, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $55.0 million in order to refinance the existing indebtedness of three of its vessels and for general corporate purposes. The credit facility matures in March 2027 and bears interest at daily cumulative or non-cumulative compounded RFR rate (as defined in the loan agreement) plus 2.25% per annum. On March 31, 2022, the entire amount was drawn under this loan.
Cash Distribution
The Board of Directors of Navios Partners declared a cash distribution for the first quarter of 2022 of $0.05 per unit. The cash distribution will be payable on May 12, 2022 to all unitholders of record as of May 9, 2022. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.
Operating Highlights
Navios Partners owns and operates a fleet comprised of 54 dry bulk vessels, 47 containerships and 49 tanker vessels, including three newbuilding Capesize bareboat charter-in vessels expected to be delivered by the second half of 2022, two newbuilding Capesize bareboat charter-in vessels expected to be delivered by the first half of 2023, two newbuilding Panamax vessels expected to be delivered by the second half of 2022 and first half of 2023, one newbuilding VLCC bareboat charter-in vessel expected to be delivered by the second half of 2022, four newbuilding /LR2 vessels expected to be delivered in 2024 and first half of 2025, ten newbuilding Containerships expected to be delivered by the second half of 2023 and in 2024 and two Containerships agreed to be sold and expected to be delivered in the second half of 2022.
Navios Partners has entered into short, medium and long-term time charter-out agreements for its vessels with a remaining average term of approximately 1.8 years. Navios Partners has currently fixed 55.4% of its available days for the remaining nine months of 2022 and 29.0% for 2023. Navios Partners expects to generate contracted revenues of approximately $563.3 million and $542.7 million for the remaining nine months of 2022 and for 2023, respectively. The average expected daily charter-out rate for the fleet is $28,697 and $38,253 for the remaining nine months of 2022 and for 2023, respectively.
EARNINGS HIGHLIGHTS
For the following results and the selected financial data presented herein, Navios Partners has compiled condensed consolidated statements of operations for the three month periods ended March 31, 2022 and 2021. The quarterly information was derived from the unaudited condensed consolidated financial statements for the respective periods. EBITDA, Adjusted EBITDA, Adjusted Earnings per Common Unit basic and diluted and Adjusted Net Income are non-GAAP financial measures and should not be used in isolation or substitution for Navios Partners’ results calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Upon completion of the merger (“NMCI Merger”) with Navios Maritime Containers L.P. (“Navios Containers”) on March 31, 2021, beginning from April 1, 2021, and obtaining control over Navios Maritime Acquisition Corporation (“Navios Acquisition”) on August 25, 2021, beginning from August 26, 2021, the results of operations of Navios Containers and Navios Acquisition are included in Navios Partners’ Consolidated Statements of Operations. On October 15, 2021, Navios Partners completed its merger (“NNA Merger”) with Navios Acquisition.
Three month periods ended March 31, 2022 and 2021
Time charter and voyage revenues for the three month period ended March 31, 2022 increased by approximately $171.5 million, or 263.4%, to $236.6 million, as compared to $65.1 million for the same period in 2021. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in Time Charter Equivalent (“TCE”) rate. For the three month period ended March 31, 2022, TCE rate increased by 37.4% to $20,386 per day, as compared to $14,836 per day for the same period in 2021. The available days of the fleet increased by 164.1% to 11,228 days for the three month period ended March 31, 2022, as compared to 4,252 for the same period in 2021 mainly due to the NMCI Merger and the NNA Merger.
EBITDA of Navios Partners for the three month periods ended March 31, 2022 and 2021 was affected by the items described in the table above. Excluding these items, Adjusted EBITDA increased by approximately $92.4 million to $126.1 million for the three month period ended March 31, 2022, as compared to $33.7 million for the same period in 2021. The increase in Adjusted EBITDA was primarily due to a: (i) $171.5 million increase in time charter and voyage revenues; and (ii) $0.5 million decrease in loss on sale of vessels. The above increase was partially mitigated by: (i) a $50.2 million increase in vessel operating expenses, mainly due to the increased fleet; (ii) a $14.6 million increase in time charter and voyage expenses; (iii) an $9.0 million increase in general and administrative expenses, mainly due to the increased fleet; (iv) a $4.9 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); and (v) a $0.9 million increase in other expense, net.
Net income for the three month periods ended March 31, 2022 and 2021 was affected by the items described in the table above. Excluding these items, Adjusted Net Income for the three month period ended March 31, 2022 amounted to $85.7 million as compared to $11.8 million for the three month period ended March 31, 2021. The increase in Adjusted Net Income was primarily due to a: (i) $92.4 million increase in Adjusted EBITDA; and (ii) $21.8 million increase in amortization of the unfavorable lease terms. The above increase was partially mitigated by a: (i) $29.8 million increase in depreciation and amortization expense; (ii) $7.4 million increase in interest expense and finance cost, net; (iii) $3.0 million increase in amortization of deferred drydock, special survey costs and other capitalized items; and (iv) $0.1 million decrease in interest income.
Fleet Employment Profile
The following table reflects certain key indicators of Navios Partners’ core fleet performance for the three month periods ended March 31, 2022 and 2021 (including the Navios Containers’ fleet and Navios Acquisition’s fleet beginning from April 1, 2021 and August 26, 2021, respectively).
