Navios Maritime Holdings Inc.

Thank you for joining us for Navios Maritime Partners' second quarter 2025 earnings conference call. With us today from the company are Chairwoman and CEO, Mrs. Angeliki Frangu, Chief Operating Officer, Mr. Stratos De Cipris, Chief Financial Officer, Mrs. Edith Cironi, and Chief Trading Officer, Mr. Vincent Vandevale. As a reminder, this conference call is being webcast. To access the webcast, please go to the investor section of Navios Partners website at www.navios-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 Litigation Reform Act of 1995 about Navier'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 novice partners' management and are subject to risks and uncertainties which would cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in novice partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Nervous 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. Frankel will offer opening remarks. Next, Mr. DeCibris will give an overview of Nervous Partners segment data. Next, Ms. Tironi will give an overview of Nervous Partners financial results. Then, Mr. Vandervalle will provide an industry overview. And lastly, we'll open the call to take questions. Now, I turn the call over to Navios Partners Chairwoman and CEO, Mrs. Angeliki Frango. Angeliki?

Good morning, all, and thank you for joining us on today's call. I am pleased with the results for the second quarter of 2025 in which we reported revenue of $327.6 million and an EBITDA of $178.2 million and net income of $69.9 million. Earnings per common unit were $2.34 for the quarter. Global economies have been surprisingly robust given their certain macro environment. In addition, we are witnessing the creation and reshaping of new trade patterns with longer distances due to the war in Ukraine and Russia, continual attacks in the Red Sea, and a new and evolving world tariff regime. As a result, the shipping market generally is healthy. Please turn to slide 6. Navios Partners is a leading publicly listed shipping company with 173 vessels. These vessels have an average age of 10 years and are in three different segments and 15 asset classes. As you can see, the vessel value is approximately equal in each sector. We ended the second quarter with 389 million of cash on our balance sheet. Our net LTV as of the end of the second quarter was calculated at 35.3%, essentially unchanged from the last quarter. Please turn to slide 7. We generated 96 million in gross sales proceeds from the sale of three vessels with an average age of 16.5 years. We purchased two Aframax LR2 tankers for $133 million and we expect delivery of these vessels in 2027. We also took delivery of one new building Aframax LR2 tanker fixed for $27,446 net per day for the next five years. We recently took swift action in response to OFAC sanctions on one of our counterparties. On July 3, 2025, the US Department of Treasury's Office on Offering Asset Control added a counterparty of Navios to its sanctions list. The following day, we terminated contracts for two related VLCCs, Bill 2020 and 2021. that were bearable charter out each at a daily net rate of $27,456, ending in October 2030 and February 2031. Swift action allowed us to redeploy these vessels into a healthy spot market. We anticipate entering into long-term charters for these vessels at an appropriate time. For the remaining six months of 2025, contracted revenue exceeds estimated total cash expense by $56 million. We have 6,838 remaining open and index days, about 25% of our available days, so we have significant cash-generative opportunities. Please turn to slide eight, where we outline a return of capital program. Under our dividend program, we paid 20 cents dividend per unit annually. In the second quarter of 2025, we paid a dividend of a million and a half dollars. In addition, so far this year, through August 13th of 2025, we repurchased 716,575 common units for $27.8 million. Including dividends, we returned a total of $30.8 million in 2025. Under the entire unit repurchase program, we invested $52.8 million through August 13, 2025, and repurchased 1,206,530 units, or about 4% of our common units outstanding at the time we commenced the program. As we saw on the slide, we estimate that we effectively returned an additional $3.8 per unit of value of NAV to unit holders through these purchases. As of August 13, 2025, we had $47.2 million available under our unit repurchase program. The volume and timing 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 9. We outline the challenges we have been addressing. We assemble a team regularly to dive into the details of emerging information in an attempt to understand how various risks are evolving. On the top right part of the slide, we outline how we are addressing the uncertain market and the things we have accomplished. The $3.1 billion in contracted revenue stems from our action in past markets, where sentiment allows us to enter into long-term charters. We are also focused on our interest rate risk. we have been hedging this risk either by entering into fixed rate financing arrangements or through hedges that do not require posting additional collateral. At the bottom of the slide, we show how our fleet has evolved through selected metrics. As you can see, our fleet size and age are about the same as they were in the year end 2022. However, about 28% of our fleet was acquired in the past four and a half years, so we maximized energy efficiency by maintaining a fleet of useful vessels with the latest technology. On the financial side, we focused on deleveraging and reduced net LTV from 45% at the end of 2022 to 35.3% at the end of the second quarter 2025. I now turn the presentation over to Mr. Stratos Desiplis, NavVue'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 the second half of 2025. We fixed 75% of available days at a net average rate of $24,989 per day. Contracted revenue exceeds estimated total cash expense by about 56 million, and we have 6,838 remaining open or index-linked 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 27,615 available days by vessel type. Please turn to slide 11. We are constantly renewing our fleet in order to maintain a young profile. We reduce our carbon footprint by modernizing our fleet, benefiting from newer technologies and advanced environmentally friendly features. During the second quarter, we acquired two new building Afra Maxell R2 vessels for $133 million. Vessels are expected to be delivered in the first half of 2027. In June 2025, we took delivery of one Afra Maxell R2 vessel that has been chartered out for five years at an average net daily rate of $27,446. We have 22 additional new building vessels delivering to our fleet through 2028, representing 1.4 billion of investment. Based on our financing, both agreed and in process, we have about 150 million of equity remaining to be paid. In container ships, we have four vessels to be delivered with a total acquisition price of about 0.4 billion. We have mitigated residual value risk with long-term credit-worthy charters, expected to generate about $0.3 billion in revenue over a five-year average charter duration. In tankers, we have 18 vessels to be delivered for a total price of approximately $1 billion. We charter out 12 of these vessels for an average period of five years, expected to generate aggregate contracted revenue of about $0.6 billion. We have also been opportunistically selling older vessels. In 2025, we sold 6 vessels, 3 dry bulk and 3 container ships with an average age of 18 years for a total of about 130 million. Moving to slide 12, we have a strong backlog of contracted revenue that we built over the previous years that creates visibility in an uncertain environment. Contracted revenue was reduced by about 150 million due to the sale of one transshipment vessel and the termination of the contracts on two VLCC vessels, which are currently employed in a healthy spot market. Post these events, our total contracted revenue amounts to 3.1 billion. 1.2 billion relates to our tanker fleet, 0.2 billion relates to our dry bulk fleet, and 1.7 billion relates to our container ships. Charters are extending through 2037 with a diverse group of quality counterparts. I now pass the call to Eri Cironi, our CFO, who will take you through the financial highlights. Eri?

Thank you, Stratos, and good morning, all. I will briefly review our unnoticed financial results for the second quarter in the first half ended June 30, 2025. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. Moving to the earnings highlights, on slide 13, total revenue for the second quarter of 2025 decreased by 4.3% to $328 million, compared to $342 million for the same period in 2024, due to lower fleet combined time charter equivalent rate, available days, and revenue from freight voyages. Our combined TCE rate for the second quarter of 2025 decreased by 1.5% to 23,040 per day, and our available days decreased by 0.8% to 13,388 days compared to Q2 2024. In terms of sector performance, the TCE rate for our container fleet increased by 3.6% to 31,316 per day. In contrast, the TCE rate for our dry bulk and tanker fleet was 13.9% and 4.6% lower, respectively, at 15,470 per day for dry bulk and 26,537 per day for tankers. EBITDA for the second quarter and the first half of 2025 was adjusted as explained in the slide footnote. Adjusted EBITDA for Q2 2025 decreased by $17 million to $173 million compared to Q2 2024. The decrease is driven primarily by $15 million decrease in time charter and voyage revenues, a $3 million increase in general and administrative expenses, and a 9 million increase in vessel operating expenses as a result of a 5.6% increase in OPEX days and a 4.5% increase in our combined OPEX rate to 7,108 per day, also as a result of the change in the composition of our fleet. Adjusted EBITDA was positively affected by a 9 million decrease in time chartered and voyage expenses due to less freight voyage days in the second quarter of 2025. Adjusted net income for Q2 2025 was 64 million compared to 94 million in Q2 2024. The decrease is mainly due to a 17 million decrease in adjusted EBITDA, a 9 million increase in depreciation and amortization, and a 3 million increase in interest expense and finance cost net. Adjusted earnings and earnings per common unit for Q2 2025 were $2.15 and $2.34 respectively. Total revenue for the first half of 2025 decreased by $29 million to $632 million compared to the same period in 2024. The decrease was mainly a result of lower combined TCE rate, available days, and revenue from freight voyages. Our combined TCE rate for the first half of 2025 was 22,154 per day. In terms of sector performance, TCE rate for our containers increased by 2.9% to 30,906 per day, compared to the same period in 2024. In contrast, our dry bulk and tanker TCE rates were approximately 12.6% and 5.9% lower, respectively. TCE rates for our dry bulk vessels stood at 14,070 per day, and for our tankers, 26,316 per day for the first half of 2025. Adjusted EBITDA for the first half of 2025 decreased by $28 million to $326 million. The decrease was primarily due to $29 million decrease in time charge and voyage expenses a $4 million increase in general and administrative expenses, and a $16 million increase in personal operating expenses, mainly as a result of a 5.2% increase in OPEX days, and a 3.6% increase in our combined OPEX rate to $7,045 per day, also as a result of the change in the composition of our fleet. Adjusted EBITDA was positively affected by 21 million degrees in time charter and voyage expenses due to less freight voyage days in the first half of 2025. Adjusted net income for the first half of 2025 was 112 million, 54 million lower than the first half of 2024. The decrease is mainly due to a $28 million decrease in adjusted EBITDA, a $17 million increase in depreciation and amortization, and a $7.5 million increase in interest expense and finance cost net. Adjusted earnings and earnings per common unit for the first half of 2025 were $3.73 and $3.72 respectively. Turning to slide 14, I will briefly discuss some key balances data. As of June 30, 2025, cash and cash equivalents, including restricted cash and time deposits in excess of three months, were $389 million. During the first half of 2025, we paid $107 million under a new building program, net of debt. We concluded the sale of three vessels for $34 million. adding about 22 million cash after debt repayment. Long-term borrowings, including the current portion, net of deferred fees increased to 2.2 billion following the delivery of five vessels during the first half of the year. Net debt to book capitalization improved to 33.9%. Slide 15 highlights our debt profile. We continue to diversify our funding sources between bank debt and leasing structures. Following our 88 million interest rate hedge in Q1 2025, 29% of our debt and bearable liabilities have fixed interest rate at an all-in rate of 5.5%. The hedge mechanism was part of the original loan agreement and does not require additional collateral. We also have mitigated part of the increased interest rate cost by reducing the average margin for our drone floating rate debt and bed bolt liabilities to 1.9%. I would like to note that the average margin for the committed and drone floating rate debt of our new building program is 1.4%. Our maturity profile is tagged with no significant balloons due in any single year. In Q2 2025, Navios Partners completed three facilities for a total amount of 390 million. I now pass the call to Vincent Vandevale, Navios Partners Chief Trading Officer, to take you through the industry section. Vincent.

Thank you, Iri. Please turn to slide 17. Geopolitical developments continue to shift worldwide trading routes caused by the tariff war, restricted Suez Canal passages, Ukraine war, and implementation of the USTR. Announced tariffs are not expected to have a significant effect on tankers and dry bulk trade, apart of grain and steel. The heaviest tariff impacts will be on container ships and car carriers. The Red Sea entrance leading to the Suez Canal continues to operate at the restricted transit levels, particularly since the sinking of two ships transiting the waterway in July. The Ukraine war is shifting trading patterns with limited grain exports out of the Black Sea and benefiting exports out of Brazil and USA, and Russian crude exports diverted to Asia due to tighter sanctions. On April 17, USTR released a revised Section 301 fee proposal targeting Chinese vessel operators and Chinese-built ships with extra port fees when calling the US ports. These fees are to take effect from October 25. Please turn to slide 19 for the review of the dry bulk industry. Dry bulk trade softened in first half 25 due to weather patterns, typical seasonality, increased domestic coal production in China and India, and slower Chinese grain imports. As a result, the Baltic Dry Index average declined 30% in first half 25 versus first half 24, but has risen 37% since the end of June, standing at 2,044 on August 15th. Continued recovery is expected through Q3 driven by caves due to seasonally higher volumes of iron ore and bauxite. Please turn to slide 20. The current order book stands at 11% of the fleet. Net fleet growth is expected to be 3.1% in 2025 and vessels over 20 years of age are about 11% of the total fleet, which is slightly higher than the order book. In concluding our dry bulk sector review, slowing demand growth for natural resources may be balanced by restrictions in transiting the Red Sea, long-haul trades of bauxite and R&R from West Africa to Asia, and a low pace of new building deliveries. This should support higher freight rates as the freight future market currently indicate, particularly for capes. Please turn to slide 22 for the review of the tanker industry. World GDP is expected to grow by 3% in 2025, based on the IMF July forecast. The IEA projects a 0.7 million barrels per day increase in global oil demand in 2025. Crew tankers' earnings have risen as OPEC unwinds its 2.2 million barrels per day voluntarily production cuts, More crude is exported from Brazil, the USA, and as Asian refineries replace Russian and Iran barrels with non-sanctioned imports. Overall, the political environment along with the normal seasonality, the reduction of the fleet due to sanctioned vessels, low global oil inventories, and additional production from OPEC and Atlantic basic suppliers should support crude freight rates. Please turn to slide 23. The US Office of Foreign Asset Control, OFAC, continues to issue new sanctions targeting Russia and Iran's oil revenue. The total number of sanctioned vessels is now about 13% of the tanker fleet. Both China and India have said that they will not allow OFAC sanctioned vessels to discharge. Please turn to slide 24. Seaborne crude and products trades continues to be affected by the war in Ukraine. Both the crude and the product market rates remains at healthy levels. Please turn to slide 25. The VLCC fleet had a zero fleet growth in 24 and is expected to grow 0.4 in 25. The current order book is 12.3% of the fleet following a record ordering spree in 24. Vessels over 20 years of age are about 20% of the total fleet. Turning to slide 26. Production tanker net fleet growth was 1.7% for 24 and is expected to increase by 5.8% in 25. The current product tanker order book is 19.7 of the fleet compared to 18.3 of the fleet which is 20 plus years of age. Concluding the tanker market overview, tankers rates continue at healthy levels. The combination of a moderate growth in global hold amount, sanctions reducing the numbers of available vessels, new longer trading routes for both crude and products, and the IMO 2023 regulations should provide a healthy tanker earnings going forward. Please turn to slide 28 for a review of the container industry. Container ships' rates remain firm because of the Red Sea. TU miles increased by about 19% in 24. The continuous Red Sea disruption will lead to an expected TU mile increase of 2.7% this year, providing healthy time chart rates while ships avoid the waterway. However, continuing record new building ordering and record fleet growth should eventually modify these gains. Tariffs, particularly the outcome of the tariff negotiations on US imports of Chinese goods, will have a significant effect on demand and trade should they remain at recent announced levels. Turning to slide 29, the current order book stands at 31% compared to 13.5% of the fleet 20 years of age or older. About 80% of the order book is for 10K TEU vessels or larger. Although trade is expected to grow by 2.6% in 2025, net fleet growth is expected to grow by 6.7% in 2025, following a 10% net fleet growth in 2024. Concluding the container market overview, if the contemplated tariffs between U.S. and China remain in place, this may have a negative effect on demand and trade. However, the expected world GDP growth of 3% for 2025 provides a somewhat positive counterpoint. This concludes our presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Thank you, Vincent. This completes our formal presentation, and we open the call to questions.

Absolutely. At this time, if you would like to ask a question, Please press the star and 1 keys on your telephone keypad. Keep in mind you can remove yourself from the question queue at any time by pressing star and 2. Again, it is star and 1 to ask a question today. We'll take our first question from Omar Naqta with Jefferies. Please go ahead. Your line is open.

Thank you. Hi, Angeliki. Hi, everyone. Good afternoon and good morning. Yeah, thanks for the update. Obviously a very good amount of detail, and it looks like a good amount of stuff has taken place for an obvious. And maybe just a couple of questions from my side, perhaps first on those two VLCCs that were on charter to VS tankers. You know, that entity now being sanctioned, you've been able to terminate those contracts, which looks like it's going to perhaps work out nicely given the setup for the sector. I just wanted to ask – You're planning to trade those on the spot market. You mentioned looking to put them on charter at some point down the line. Just wanted to ask in terms of timing of that, when would you want to put those away on charter? And then also, if for any reason that entity were to be removed from that list, the OFAC list, would that in some way compel you to have to give them back to that company and resume those leases?

Excellent. Let's start with the VLCCs. I will say one thing, Omar. First of all, I have to give a big congratulation on this to our risk management team, because to be able to terminate immediately, practically, that is a work that has done well in advance with a team that was organized that gave us the opportunity immediately to terminate, take the vessels back, and be able to charter them in a healthy spot market. And this is also the team that monitors all this time, all the trade, every loading, every discharging, every movement. And I am very proud of the team. The reality is that this is a healthy market. And we will be open to trade in this market. And I think Q4 will be, it looks to be shaping very well. But always we look at opportunities at the right time. to put vessels on longer durations. I mean, one-year age over 50,000 and longer duration is... Let's see. We are monitoring and we'll take the opportunity to the right time.

Okay. Thank you. And then just out of curiosity, just to make sure, you're free and clear of those contracts now, so you can do what you want.

Yes, and I'm saying, sorry, because you ask another question. The other question is that the moment you cancel the contract, that's it, you have zero, even though I don't see that easily that counterparty will be back, but it cannot claim or come after because it's a clear contract and that cancellation and termination of the contract is irreversible.

Okay, very good. Thank you. Yeah, so that looks very unique and perhaps compelling opportunity here. And then, obviously, just in terms of the fleet, you continue to fine-tune it, which, as you've said, is part of the core strategy of Navia selling older and investing in newer capacity. I have two questions on that. The LR2s you've ordered, Those are not chartered. It doesn't look like, although the previous LR2s have been, it's an expectation that you will fix those out ahead of delivery. That's one. And then two, given the two older Panamax container ships you sold, those look to be very good prices, I would think at least relative to what's in people's models. How do you think about the other ships that roll off charter in that vessel class? Are those effectively sales candidates, or do you intend to renew those contracts or extend them on new charters if you can?

Thank you. I mean, Omar, I will say the truth. I mean, we are very surprised with the strength of the container market, given the order book and everything, and I've been very articulate. And to be honest, we are taking... We are here to take advantage of the opportunities. If you see the sale of the two containers, the significance is also that you are selling vessels almost a year forward with surveys due at that time. So for us, this is a beautiful forward, basically, you know, selling 18-year-old almost vessels is a great idea and a redeploying vessel, cash in a different asset. In today's market, we will not buy a container without a charter. On the tanker sector, I will say because we have not really had a lot of exposure on basically almost everything is fixed, we felt that the market made sense and we do not exclude that we can do a longer term deal, but we feel comfortable on that portfolio today without a charter. We are always investigating, and we may fix it on a longer term, but we feel comfortable in that position.

Okay. Very good. Thank you, Angeliki. I'll turn it over.

Thank you.

And there are no further questions on the line at this time. I'll turn the program back to Angeliki for any additional or closing remarks.

Thank you. This completes our quarterly results and questions.

Thank you, and this concludes the Navios Maritime Partners earnings call. Thank you again for your participation, and you may now disconnect.