Navios Maritime Holdings Inc.

Thank you for joining us for Navio's Maritime Partners Third Quarter 2024 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Fragu, Chief Operating Officer, Mr. Statos De Sipris, Chief Financial Officer, Mrs. Erit Zironi, and Vice Chairman, Mr. Ted Petrone. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navio's Partners website at -mlp.com. You'll see the webcasting link in the middle of the page and a copy of the presentation referenced in today's earnings conference call will also be found there. Now I will review the Safe Harbor Statement. This conference call could contain forward-looking statements within the meaning of the Private Securities and the National Litigation Reform Act of 1995 about Navio's Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navio's Partners management and are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navio's Partners filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navio's Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows. First, Ms. Franmo will offer opening remarks. Next, Mr. Vissippis will give an overview of Navio's Partners segment data. Next, Ms. Cironi will give an overview of Navio's Partners financial results. Then Mr. Petron will provide an industry overview. And lastly, we'll open the call to take questions. Now I turn the call over to Navio's Partners Chairwoman and CEO, Ms. Angeliki Franco. Angeliki?

Good morning and thank you all for joining us on today's call. I am pleased with the results for the third quarter of 2024 and the nine-month period ended September 30th, 2024. For the quarter, we reported revenue and net income of $340.8 million and $97.8 million respectively. For the first nine months, we reported revenue and net income of $1 billion and $272.6 million respectively. Earnings per common unit were $3.20 for the quarter and $8.87 for the first nine months. These past 18 months has been a good time for shipping. All sectors have been performing well. More surprisingly, this performance has been in the face of slowing growth from China, an anemic European economy and two armed conflict. The Ukrainian conflict is in its third year and is evolving dangerously with the addition of North Korean troops to the battery space. The war in Israel is in its second year, having expanded to Lebanon and now including the direct exchange of fire between Iran and Israel. In light of this, I question whether we are becoming insensitive to increasing risk of struggling economies and expanding conflict zones. At Navios, we vigilantly monitor these increasing risks and try to calibrate our business activity accordingly. Please now turn to slide six. Navios Partners is a leading public listed shipping company with 179 vessels diversified in 16 asset classes in three sectors. We have 331.9 million of cars on our balance sheet. We continue on our glide path to our target net leverage range of 20, 25%. As you can see, our net LTV as of the end of the third quarter was 32.9%, not meaningfully up from the last quarter. Please turn to slide seven. I would like to focus on how we are returning capital to our unit holders. Under our dividend program, we pay a 20 cents dividend per unit annually. In addition, we have a 100 million unit purchase program. Under this program here today, we repurchase 351,125 units. We used 18.3 million to repurchase .2% of the original float. Including Pindance, we have returned a total of 22.9 million dollars to our unit holders. In addition, the repurchase of our unit was accretive. The analyst average estimate of our unit NAV is now around $148 per unit. In contrast, our unit repurchase price averaged $52.1 by purchasing units way below an estimate NAV, we captured a 33.7 million discount. This represents a creation of a $1.11 to each remaining unit holder. We have around 81.7 million of availability under the unit repurchase program. The volume and time of further repurchases will be subject to general market and business conditions, working capital requirements, and other investment opportunities among other factors. Please turn to slide eight, where we provide you an S&P update for the third quarter and Q4 2024 quarter today sales. We generated 25.9 million gross sale grosses from two dry bulk refills with an average age of 19 years. For acquisitions, we spent $212 million for two new buildings methanol ready and scrub-fitted 7,900 TU container ships. These container ships were fixed for $43,247 net per day for five years. In terms of deliveries, we took delivery of previously announced new building vessels. Two were 5,300 TU container ships fixed at an average rate of $37,282 net per day for 5.3 years, and one was an Aframax LR2 tanker fixed for 25,576 net per day for five years. Contracted revenue update. Contracted revenue continues to bleed and is currently 3.9 billion up 200 million from the previous quarter. We added 421.7 million of contracted revenue in the third quarter and fourth quarter quarter to date. 159.2 million was for two new buildings, 7,900 TU container ships, fixed at a $43,247 net per day for five years. $147.4 million from five 4,250 TU container ships fixed at $34,915 net per day for 2.3 years. $80.6 million from three MR2 tankers fixed for $24,544 net per day for three years. And $34.5 million from one VLCC tanker fixed at $44,438 net per day for 2.1 years. Our operating cash flow potentially remains strong with the fourth quarter of 2024, we estimate 61.8 million excess of contracted revenue over total cash expense with 2,650 remaining opening index days. Please turn to slide nine, where we focus on how we are executing on our strategy. We have achieved a 27% decrease in net LTV since year end 2022. In terms of fleet renewal and modernization, we have purchased 46 new buildings since the first quarter of 2021, of which 19 vessels have been delivered. We have also sold 31 vessels since the third quarter of 2022. We provide a view of the evolution of our fleet through selected metrics. As you can see, our fleet is only slightly larger than it was in year end 2022. Our fleet age remains about the same. We maximize energy efficiency by maintaining a fleet of useful vessels with the latest technology. In addition, as you can see, from vessels value, the steel value of our fleet has increased by about 31% since the end of 2023. I would like to point out that much of this increase has been from volatility in the container ship segment, which dropped significantly post pandemic and has recovered in 2024 as a primary beneficiary of the Red Sea conflict and longer ton miles. I would also note that the steel values do not give any consideration to our 3.9 billion contracted revenue. With a stable and performing fleet, our financial metrics are strong. Our adjusted EBITDA is up 5% over the first nine months of 2023 and .6% over the same period in 2022. Our cash balance is 332 million and current net leverage is 32.9%. In material improvement since the end of 2023 and in a path to reach our target of net electric TV of 2025%. We present at the bottom of the slide, the average analyst estimates of the company's NAV for the period starting Q4 2022 and ending Q3 2024. Navigate per unit NAV increased by $37 to $148. An increase of .3% over the 21 month period. I now turn the presentation over to Mr. Stratos De Siblis, Navigate's partner, Chief Operating Officer. Stratos.

Thank you Angeliki and good morning all. Please turn to slide 10, which details our operating free cash flow potential for Q4 of 2024. We fixed 81% of available days at the net average rate of $26,052 per day. Contracted revenue is expected to exceed total cash expense by 61.8 million and we have 2,650 remaining open or indexing days that should provide substantial additional cash flow. So that you can perform your own sensitivity analysis on the right side of the slide, we provide our 15,741 available days by vessel type. Please turn to slide 11. We are constantly renewing the fleet so we maintain the young profile. We reduce our carbon footprint by modernizing our fleet, benefiting from new technologies and NECO vessels with greener characteristics. In Q3 and so far in Q4, we took delivery of three vessels. Two 5,300 TU container ships all chartered out for an average period of 5.3 years at an average net daily rate of $37,282. One LR2 Athormax vessel which has been chartered out for five years at $25,576 net per day. Following the deliveries, we have 27 additional new building vessels delivering to our fleet through 2028, representing 1.9 billion of investment. In container ships, we have eight vessels to be delivered with a total acquisition of price of 0.8 billion. We have mitigated this risk with long-term and we have generated worth of charges expected to generate about 0.8 billion in revenue over a 6.6 year average charter duration. In tankers, we have 19 vessels to be delivered for a total price of approximately 1.1 billion. We charter out 15 of the vessels for an average period of five years, expected to generate aggregate contract and delivering about 0.7 billion. We have also been opportunistically replacing older vessels. In 2024, we sold nine vessels with an average age of 17 and a half years for 183 million. At the same time, we exercised purchase options of five chartering Japanese-built vessels with an average age of eight years for a total price of 142.1 million. Moving to flight 12, we continue to secure long-term employment. In Q3 and Shafari in Q4, we've created about 420 million additional contract delivery, approximately 305 millions from our container ships and about 115 million from tankers. Our total contracted revenue amounts to 3.9 billion. 1.5 billion relates to our tanker fleet, 0.3 billion relates to our dry bulk fleet and 2.1 billion relates to our container ships. Charters are extended through 2037 with a diverse group of quality counterparties. Almost 50% of our contracted revenue is expected to be earned by the end of 2026. I now pass the call to Eric Ziloni of CFO, which will take you through the financial highlights. Eddie.

Thank you, Charters, and good morning all. I will briefly review our unaudited financial results for the third quarter and first nine months of 2024. The financial information is included in the press release and is summarized in a slide presentation available on the company's website. Moving to the earnings highlights on slide 13, total revenue for the third quarter of 2024 increased to 341 million compared to 323 million for the same period in 2023 due to higher fleet time charter equivalent rate despite slightly lower available days. Our fleet time charter equivalent rate for the third quarter of 2024 increased by 7% to 23,591 per day compared to Q3 2023. In terms of sector performance, the time charter rate for our dry bulk fleet increased by 32% to 18,632 per day compared to the same period in 2023. In contrast, time charter rates for our containers and tankers were approximately 11% and 7% lower, respectively. Time charter equivalent rates for our containers stood at 30,710 per day, and for our tankers at 25,788 per day for the third quarter of 2024. EBITDA, net income, and EPU were adjusted, as explained in the slide footnote. Excluding these amounts, adjusted EBITDA for the third quarter of 2024 increased by 22 million to 195 million compared to Q3 2023. Adjusted net income for Q3 2024 increased by 14 million to 97 million compared to Q3 2023. Total revenue for the first nine months of 2024 increased by 22 million to one billion compared to the same period in 2023. The increase in revenue was mainly a result of higher fleet time charter equivalent rate despite slightly lower available base. Our fleet time charter equivalent rate for the first nine months of 2024 was 22,830 per day. In terms of sector performance, time charter rate for our dry bulk fleet increased by 24% to 16,920 per day compared to the same period in 2023. In contrast, time charter rates for our containers and tankers were approximately 13 and 6% lower, respectively. For the first nine months of 2024, time charter equivalent rates for our containers stood at 30,275 per day and for our tankers, 27,241 per day. Adjusted EBITDA for the first nine months of 2024 increased by 29 million to 549 million compared to the same period last year. Adjusted net income for the first nine months of 2024 increased by 12 million to 262 million compared to the same period last year. Adjusted earnings per common unit for the first nine months of 2024 were $8.53. Turning to slide 14, I will briefly discuss some key balance sheet data. As of September 30th, 2024, cash and cash equivalents, including restricted cash and time deposits in excess of three months was 332 million. During the first nine months of 2024, we paid 174 million under a new building program, Net of Debt. We concluded the sale of five vessels for 104 million, adding about 70 million cash after the repayment of debt. Long-term borrowings, including the current portion, Net of Debt fees, increased by 221 million to 2.1 billion, many as a result of the deliberate of eight new building vessels for which their respective delivery installments were paid with debt. Net debt to book capitalization increased to 34.3%. Slide 15 highlights our debt profile. We continue to diversify our funding resources between bank debt and lease structures. 31% of our debt has fixed interest rate at an average rate of 5.5%. We also have mitigated part of the increased interest rate cost by reducing the average margin for the floating rate debt for the in the water fleet to 2%. I note that the average margin for the floating rate debt of our new building program is 1.65%. Our maturity profile is staggered with no significant balloons due in any single year. In September, 2024, Navias partners entered two new credit facilities. The first is for up to 130 million to refinance the existing debt of fixed vessels and finance part of the acquisition cost of one new building LR2 vessel. The transfer relating to the new building is priced at terms of plus 150 basis points per annum and the remaining facility amount is priced at terms of plus 175 bits per annum. The second facility is up to 48 million to refinance the existing debtness of three vessels and finance part of the acquisition cost of an ultra max vessel. The facility bears interest of terms of plus 175 basis points per annum or 70 basis points for any part of the loan secured by Casco Laterals. Then to slide 16, you can see our ESG highlights. We continue to invest in new energy efficient vessels and reduce emissions through energy saving devices and efficient vessel operations. Navias is a socially conscious group whose core values include diversity, inclusion and safety. We have strong corporate governance and clear code of ethics while our board is composed by majority independent directors. And now pass the call to Ted Petrone to take you through the industry section. Ted.

Thank you, Ari. Please turn to slide 18 for a view of current trade disruptions. The Red Sea entrance leading to the Suez Canal, a strategic maritime transit point, continues to operate at restricted transit levels. Red Sea disruptions have caused a rerouting of ships via the Cape of Good Hope, increasing costs and ton miles. Since the first half of December 23, transits have reduced by 51% for containers, 55% for dry bulk vessels and 50% for tankers. Panama Canal daily transits are essentially back to normal. Please turn to slide 20 for a review of the tanker industry. World GDP is expected to grow at .2% in 2024 and 2025 based on the IMF's October forecast. The IEA projects a 0.9 million barrels per day increase in world oil demand for 2024 and a 1 million barrel per day increase in 2025. Chinese crude imports continue to disappoint, averaging 11.1 million barrels a day through September, down 3% or about 0.3 million barrels a day compared to the same period last year. After a strong first half, Q3 seasonality played out on the back of refinery maintenance during the shoulder season, combined with softening Chinese demand. However, current rates remain in line with long-term averages. Product tankers held up better than crude, even though swing tonnage, i.e. uncoded tankers taking CPP, was up over 60% for the same period last year. October saw increased crude movements, raising crude tanker rates. This should assist product tanker rates. The OPEC plus crude export cuts, which were scheduled to commence unwinding on December 1st this year, are currently planned to start January 1st, 2025, which if implemented should further assist crude tanker rates. Turning to slide 21, as previously mentioned, both crude and product rates remain at healthy levels through the solid supply and demand fundamentals and shifting trading patterns. Crude tonnage miles are expected to grow .8% in 2024 and a further .1% in 2025. Product tonnage miles are expected to grow .9% in 2024 and a further 2% in 2025. These percentages increases incorporate continued Red Sea restrictions in 2024. Turning to slide 22, fleet growth is projected to be zero and possibly negative for BLCCs in 2024 and 2025 combined. This decline can be partially attributed to owners hesitant to order expensive long-lived assets in line of macroeconomic uncertainty and engine technology concerns due to CO2 restrictions enforced since the beginning of this year. The current low order book is only .3% of the fleet or 75 vessels, one of the lowest in 30 years. Vessels over 20 years of age are about .1% of the fleet or 184 vessels, which is over two times the order book. Turning to slide 23, projected product tanker net fleet growth is .7% for this year and .3% for 2025. The current product tanker order book is .3% of the fleet and compares favorably to the .3% of the fleet, which is 20 years of age or older. In concluding the tanker sector review, tanker rates across the board continue at historically healthy levels, combination of moderate growth and global oil demand, new longer trading routes for both crude and product as well as a load of moderate order books and the IMO 2023 regulations should provide for a healthier tanker earnings going forward. Please turn to slide 25 for review of the dry bulk industry. Q3 followed a similar pattern to the first half as robust Atlantic exports of iron ore, coal, and grain continued, resulting in the BDI averaging 871, slightly higher than the first half average of 1836, with an assist from a counter-psychically strong Q1. Q3 ended 2% higher than it started with the BDI bouncing off a low in early August as CAPES led the way, finishing with the highest quarterly averages a year, while PanaMax's and Supra's softened slightly. As of yesterday, the BDI was 1374 after peaking at 2110 in September 27th. The anticyclical Q4 downturn has been led by CAPES, assisted by PanaMax's, which have underperformed Supra's year to date. Dry bulk trade is expected to grow by .7% this year and .8% in 2025, enhanced by a .2% and .3% increase in ton miles respectively. Most of the growth is anticipated to come from additional Atlantic exports of the above-mentioned cargoes plus bauxite, the vast majority destined to China and Southeast Asia. Going forward, supply and demand fundamentals remain intact. Longer duration trades, the lower order book, and tightening GHG emissions regulations remain positive factors. Please turn to slide 26. The current order book stands at .3% of the fleet. Net fleet growth for 24 is expected to be .2% and only .9% in 2025, as owners remove tonnage. That will be uneconomic due to the IMO 2023 CO2 rules. Vessels over 20 years of age are about .9% of the total fleet, which is slightly higher than the order book. In concluding our dry bulk sector review, continuing demand for natural resources, restrictions in transiting the Red Sea, more and sanction related longer haul trades combined with slowing pace of new building deliveries all support freight rates going forward. Please turn to slide 28 for a view of the container industry. The Shanghai Container Freight Index, SCFI, is currently at 23.03, which is now only slightly higher than it opened the year at 18.97, at approximately 38% down from its peak of 37.34 on July 5th this year, which was the highest level outside the pandemic era. In contrast to the previously mentioned box rate, container ship rates remain firm on the back of continued rerouting of vessels away from the Red Sea and around the Cape of Good Hope, causing TEU miles to increase by about 18% this year. As we noted last quarter, pressure for time charter rates should remain for the duration of the Red Sea disruption. However, continuing record building order books and record fleet growth should eventually modify these gains in reverse course when the Middle East conflict finally settles. Although trade is expected to grow by .4% in 24 and .9% in 2025, new building deliveries in 24 and 25 combined will be equivalent to approximately 16% of the fleet, giving net fleet growth of about .3% this year, followed by .3% in 2025. This should continue to pressure rates for some time. Turn to slide 29, net fleet growth is expected to be .3% for 2024 and a further .3% for 2025. The current order book stands at .7% against .3% of the fleet 20 years of age or older. About 80% of the order book is for 10,000 TEU vessels and larger. In concluding the container sector review, longer term supply and demand fundamentals remain challenged due to economic and geopolitical uncertainties and an elevated order book. However, trade growth improvements, increasing ton miles and a world GDP growth of .2% for both 2024 and 2025 provide a counterpoint to a challenging 2025. This concludes our presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki.

Thank you Ted. This completes our format presentation and we open the call to questions.

And ladies and gentlemen, at this time, if you would like to ask a question, please press the star and one on your touchtone phone. You may remove yourself from the queue at any time by pressing star and two. Once again, that is star and one on your telephone keypad and we'll pause for a moment to allow questions to queue. We'll hear first from Omar Nakhda at Jeffries. Please go ahead, your line is open.

Thank you. Hi, good morning, good afternoon. Thanks for the update. You can tell obviously, quite quick. Morning Angeliki. Yeah, you can tell very clearly from the presentation and the release, you're continuing to execute on the strategy, selling older vessels, acquiring newer ones, which are de-risked with the contracts on delivery and clearly just adding more backlog. Here recently we've seen several shipping markets sort of becoming a bit less exciting than what we've been used to seeing the past couple of years. Ship values maybe looked at perhaps peak or at least have been easing from the recent levels. Is that something you're seeing pressure on asset prices and does that present an opportunity, you think for Navi to take advantage perhaps of owners with weaker hands?

Good morning and I think, we see the spot market, but spot market is today. If you see on the last 18 months, we have seen a surprisingly strong market in all the sectors of shipping. And I say surprisingly because basically you have an average growth in Europe, you have China, which is wobbly I would say, and you have two geopolitical, you have two world, Ukraine in its third year and in a different phase and with Israel in the second year again in a totally different phase. So I would say that this period is clearly a period of intensified risk and we are being cautious, but we are focusing on these strategies as you said. I mean, you saw that we added about 420 million of contracted revenue, 3.9 billion, modernizing our fleet and we continue, we've got delivery by vessels and we have a clear focus on our leverage, net LTV going with a target of 20, 25% and focusing on the returning capital to our unit holders. I will not take a single weakness on the moment to say that I'll change the strategy, you have to view it in a longer term and to see really something changing.

Okay, thank you for that. And I guess, yeah. I would

add that basically today everyone is well capitalized in the moment that one month won't change the equilibrium. So you need to be focused on the long-term strategy because you really need to see a real trend out of that.

Yeah, that makes sense. And I guess, you did mention just a month or recently but you take a body of work and over the past 12 months, clearly markets have been fairly strong. I guess when you think about, as you mentioned, there's two wars and there's just a lot of geopolitical and macro risks and obviously the election today in the US. I guess just in general, you mentioned doesn't change the strategy for Navias. But do you think about, when you think about the company going into 2025, is there a part of the business where you wanna add more fixed cover to just be risk everything overall or do you like the approach you have now? And is there any part of the business you think that just needs to have contract cover, whether that's tankers, dry or containers as you look ahead?

I will tell you one thing. The beauty of how we have modeled the business is we are opportunistic on the coverage. I mean, we did amazing, we awarded a lot of contracted revenue in container sector, which if you told me a year ago,

I

wouldn't have expected the strength. And we did an incredible, nicely adding almost 300 million in the container sector, which is very nice. So we have the luxury of selecting the moment that we add the contracted revenue so that we actually get the nice results. So you are not gonna go and sit on a weak moment on the market. So we do that opportunistically.

That makes sense. Yeah, that's certainly, I guess maybe just finally, you know, you've mentioned that the capital returns, you have the dividend and the share of purchases. We put 18 million to work here maybe over the past, I'm thinking maybe six months or so. I know you mentioned it's, you know, it's at the discretion of the board and there's no promises, but just in general, as we think about the capital returns thus far, is this the type of pace you'd like to keep moderate purchases on an ongoing basis? Any reason you think that you would need to slow that down or perhaps step it up?

You know, we have the usual disclaimers, as you know, but we are deliberate with our strategy. We articulated well in advance here and we are executing on that, even though this is, we have to be cautious in this kind of a market, but we are here to execute on a very deliberate strategy. We also are a target on leverage, on modernizing our fleet, putting money into work, but we also feel that turning capital to a unit hold is part of our strategy.

Yeah, great. Well, thanks Angeliki, that's it for me. I'll turn it over.

Thank you. And we have no further questions from our group. Angeliki, I will turn the floor back to you for any additional or closing remarks you have.

Thank you, this completes our quarterly results. Thank you.

Ladies and gentlemen, this does conclude our meeting for today. We thank you all for your participation. You may now disconnect your lines.