Navios Maritime Partners LP

Thank you for joining us for Navios Maritime Partners 4th Quarter and Full Year 2021 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou, Chief Operating Officer, Mr. Strato Desypris, Chief Financial Officer, Ms. Eri Tsironi, and Executive Vice President of Business Development, Mr. George Akhniotis. 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 Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios 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 NAVI's partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios 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. Frangou will offer opening remarks. Next, Mr. Desypris will provide a Navios Partners operational and fleet update overview. Next, Mr. Roni will give an overview of Navios Partners financial results. Then, Mr. Akhniotis Angeliki Frangou

Thank you, Daniela, and good morning to all of you joining us on today's call. I am pleased with our outstanding results for the fourth quarter and full year of 2021. During Q4, Navios Partners recorded revenue of $268.1 million, adjusted EBITDA of $156.6 million, adjusted net income of $121.8 million, and for the full year of 2021, Navios Partners recorded revenue of $713.2 million, adjusted EBITDA of $426.5 million and adjusted net income of $364.1 million. Please turn to slide 3. In 2021, We reimagined what a public shipping company could be like and took actions to make this a reality. Today Navios Partners is not only one of the leading US publicly listed companies based on the number of vessels but is also diversified across 15 vessel types in 3 segments servicing more than 10 end markets. About 1 third of our fleet operates in each dry bulk, container ship and tanker segments. We will discuss why we believe that this new structure offers a stronger, more resilient entity. Slide 4 presents some recent segment data. Navios Partners fleet of 146 vessels has an average age of 9.6 years and a loan-to-value of 32.5%. We have built 2.7 million in contracted revenue, of which 2.2 billion is from the container sector. Over approximately 47,000 available days, almost half are exposed to market rates. This provided upside through recovering charter rates in the dry bulk and tanker markets, which we expect in the near term. Slide 5 summarizes the basic principles behind the strength of a diversified platform. 1. A diversified platform allows us to optimize our chartering strategy. Fundamentally, this means that we can consider long-term charters in segments that offer attractive returns while allowing vessels in underperforming segments to be chartered for short-term or at index rates. Diversification allows the luxury of managing a chartering policy to our benefit without any balance sheet compulsion. 2. The segments have some counter-cyclicality building. This creates the opportunity of redeploying the strong cash flow from performing segments into asset purchases in underperforming segments where we believe attractive acquisition opportunities exist. Ultimately, we believe that this allows for optimal capital allocations. 3. Asset values themselves can be volatile. We have seen a significant appreciation in the container sector recently and have lived through significant depreciation of asset values in the past. We expect this will continue. Leverage rates can remain low only if asset values cooperate and we believe that by diversifying our asset base, the balance sheet impact of asset value volatility will be muted. Consequently, our balance sheet strength will be generated in part from this diversity of assets. Together, this diversification creates resiliency in the overall business model. Each segment works independently to mitigate volatility from the other segments. While we don't expect this to work perfectly, we think that it will reduce volatility sufficiently to allow latitude to leverage market opportunity because the overall structure is inherently more stable. We will have flexibility in our operational and financial activities and decision making process as we charter, sell and purchase vessels and obtain debt finance within this context. We believe that the net result is that we should have more predictable entity level returns. On slide 6 We drill down into how we optimize our chartering. As you can see from the chart on the top right, the container segment is enjoying historically high charter rates. Operating in this backdrop, we have opted to fix our container fleet on long-term charters with almost 100% of our available container ship days fixed for 2022. Thank you for watching. In our dry bark segments, we benefit from a market where rates are recovering to their historical 20-year averages. We have fixed only 24% of our available dry bark fleet days for 2022 and have opted to keep 76% of our 2022 available days exposed to market rates to capture any available upside. Our chartering strategy also allows us to fix our dry park fleet on long-term charters when rates do improve. Lastly, within tankers, current charter rates are 80% below their 20-year average levels. We have 46.8% of our 2022 available tanker days fixed, many with favorable legacy charters. We anticipate running this fleet Thank you very much. Thank you very much. Details our approach to capturing the unique opportunity of each segment. NMM made $1 billion investment in 18 new building vessels that will deliver to our fleet through 2024. Of this acquisition, we used the gathering strength of the container market to acquire 10 container ships, We hedge our financial investment by entering into long-term credit water charters for these vessels. We also engage in the routine and continuous management of our fleet aid profile in the dry bulk and target space. Seven dry bulk vessels and one VLCC were acquired at prices below their long-term averages. In our container ship segment, we renew our fleet by acquiring 10 5,300 EU building container ships for approximately 620 million dollars. The current market value of these vessels is estimated at 720 million dollars. These 10 container ships will earn about 710 million in contracted revenue for the 5.2 years duration of the related charters. We also capitalized on their strength in container ship values by selling two 16-year-old vessels for $220 million. Their sale was executed at historically high values and is expected to be completed in the second half of 2022. Moving on to our dry bulk segment, fleet expansion was executed at a drastic price. As you can see, Navios Partners, $332 million investment in seven new building vessels, orders when vessel values were challenged in the first half of 2021, is worth approximately $372 million today. Lastly, for the tanker segment, we are seeing a dichotomy in asset values versus charter rate, whereby values anticipate a recovering charter rate market. In fact, a new building VLCC vessel has already appreciated 36%. Slide 8 lays out how Navios Partners intends to counter volatility existing in specific segments. Navios Partners' diversified asset portfolio provides balanced stability from the idiosyncrasies of specific sectors, as you can see from the charts on the slide. Navios Partners' fleet in aggregate is currently valued at approximately $5.2 billion. While container ship values are at a historical high, dry bulk vessels values are only 25% of their all-time highs and tiger values are about 40% of their all-time highs. This variation in asset values balances out through our diversified segment results in a 32.5% loan-to-value for Navios Partners on December 31, 2021. As you can also see from the chart to the bottom left, NMM has about 3.5 billion in net equity value in these vessels. Slide 9 reviews our recent developments. During the fourth quarter Navios Partners generated 268.1 million in revenue, 156.6 million in adjusted EBITDA and 121.8 million in adjusted net income. For the full year of 2021, Maritime Partners generated 713.2 million in revenue, 426.5 million in adjusted EBITDA and 364.1 million in adjusted net income. The P&L is healthy and average balance sheet remains strong. As of December 31, 2021, we have about $130 million in cash. The size of our balance sheet cash has a number of considerations, including capital commitment for new vessels and working capital for the fleet. Consequently, I will expect that we will hold considerably more than our current cash balance. Considering only working capital for our fleet size, we estimate an approximate cash balance would be about 2 million per vessel. Leverage is 32.5% LPV as of December 31st 2021 and we have a target debt maturity profile. As an update to our S&P activity since the first quarter of 2021, We agreed to acquire 5,300 new building container ships with the deliveries expected in 2024 for $251.3 million. To sell two 16-year-old container ships for $220 million with a closing expected in the second half of 2022. An update to our chartering activity. We secure new long-term charters for 11 of our container ships that we expect to generate 670 million in revenue as follows. About 290 million through the 4 5300 TEU new building container ships charter out for an average period of 5.3 years at an average net rate of $37,282 per day and about 380,000,000 to 4,250 TEU container ships chartered out for an average period of 3.3 years and an average net rate of $45,927 per day. We continue to take advantage of robust markets. Navios Partners has $2.7 billion in contracted revenue. For 2022, our contracted revenue already exceeds forecasted expenses by almost $50 million. Moreover, out of our 46,905 available days, 21,966 of these days are exposed to market rates. allowing for significant potential cash flow generation. At this point, I would like to turn the call over to Mr. Stratos Desypris, who will take you through the next few slides. Stratos?

Thank you, Angeliki, and good morning all. Navius Partners is differentiated by its industry-leading scale and diversified sector exposure. Slide 10 details our strong operating free cash flow potential. Currently, we have contracted 53.2% of our about 47,000 available days at an average rate of $20,957 net per day. For 2022, our contracted revenue exceeds total cash expenses by almost 50 million and we still have about 22,000 days with market exposure that can provide additional operating costs. The majority of our market exposure comes from our dry bulk vessels where we have fixed approximately 24% of our available days. On slide 11, you can see our fleet profile. 2021 was a transformational year for Maritime Partners. Our fleet increased by 170% by entering into new segments and expanding our presence in the segments we were already operating. More specifically, we increased our dry bulk fleet capacity by 36% and our container ships by 370%. Additionally, we entered into the tanker segment by acquiring a 45 vessel tanker fleet. We have also been very active in renewing our fleet and reducing its average age. Since 2020, we have reduced the average age of our driver by 18% and of our container ships by 31%. The renewal process is a constant balancing effort. We like to be proactive and capture cyclical opportunities while allocating capital. As you can see at the bottom of the slide, we have 21 vessels that are over 15 years of age While at the same time, we have 18 new building vessels to be delivered from the third quarter of 2022 till 2024. Turning to slide 12, you can see some recent updates. We continue to secure long-term employment for our container ships and we have fixed 11 vessels, creating approximately 670 million in contracted revenue. More specifically, we have contracted 4 new building container ships, delivering in 2024, for over 5 years at an average rate of $37,282 net per day. Generating about 290 million of contracted revenue. These vessels were acquired for an aggregate purchase price of 251.3 million. We have also chartered out 7 containerships for periods between 3 and 3.8 years, generating revenues of approximately 380 million. These charters represent a 2.8 times increase compared to the current contracted rates of these vessels. On the S&P front, we capitalized on the strength of the container ship values by selling two 16-year-old 8200 TU container ships for 220 million. The sale was executed at historically high prices and is expected to be completed in the second half of 2022. We have also completed the sale of a 2006 Panamax vessel for 14 million. We are constantly working on refinancing and extending maturities. We have completed our second sustainability limit financing, demonstrating our commitment on ESG principles. Additionally, we are in advance discussions for a new 55 million facility for the refinance of two existing facilities. In slide 13, you can see the breakdown of our 2.7 billion contracted revenue. About 1.2 million or 45% of our contracted revenue will be earned in 2022 and 2023. 81% of our contracted revenue comes from our container ships with charters extending through 2030 with a diverse group of quality counterparts. I now pass the call to Erif Tsironi our CFO who will take you through the financial highlights.

Thank you, Stratos, and good morning all. I will briefly review our unaudited financial results for the fourth quarter and the full year ended December 31st, 2021. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. Upon completion of the merger with Navios Maritime Containers LP on March 31, 2021, and obtaining control over Navios Maritime Acquisition Corporation on August 25, 2021, the results of operation of these companies are included in Navios Partners' Consolidated Statement of Operations. On October 15, 2021, Navios Partners completed its merger with Navios Acquisition. I would like also to highlight that 2021 results are not comparable to 2020 as in 2021 NNM acquired two companies and increased its available days by 83% to 31,884 compared to 17,430 for the previous year. Moving to the earnings highlights in slide 14, total revenue for the fourth quarter of 2021 was $268.1 million compared to $69.2 million for the same period last year due to the expansion of our fleet and the improved time charter equivalent rates for both containers and bulkers. The available days in Q4 2021 increased by 136.5% to 11,363 days compared to 4,805 for the same period in 2020. Our time charter equivalent rate increased by 64.1% to $23,005 per day compared to $14,021 per day for the same period in 2020. The average Q4 2021 time charter equivalent achieved by sector was bulkers $29,548 per day, containers $23,765 per day, and tankers $15,426 per day. EBITDA and net income for Q4 2021 include a 3.3 million gain related to a sale of one vessel and a 7.6 million of transaction costs in relation to the NNA merger. Excluding these items, adjusted EBITDA increased by approximately 1.1 million to 156.6 million for the three-month period dated December 31, 2021, compared to 35.5 million for the same period in 2020. The increase in adjusted EBITDA was primarily due to a 198.9 million increase in time charter and voyage revenues and a 1.1 million increase in net loss attributable to non-controlling interest. The above increase was partially mitigated by a 47.5 million increase in vessel operating expenses, a 13.9 million increase in time chart and voyage expenses, an 8.5 million increase in general administrative expenses, a 6.3 million increase in direct vessel expenses excluding the amortization of the first dry dock special survey costs and other capitalized items, A $2.2 million increase in other income and a $0.5 million decrease in equity net earnings of affiliated companies. The above increases in expenses were mainly due to the expansion of our fleet. Total adjusted net income amounted to $121.8 million compared to the three-month period ended December 31, 2020. The increase in adjusted net income was primarily due to a 121.1 million increase in adjusted EBITDA and a 30.9 million increase in amortization of their favorable lease terms. The above increase were partially mitigated by a 30.9 million increase in depreciation and amortization expenses, a 9.6 million increase in interest expense and finance cost net, a 2.4 million increase in amortization of Deferred Dry Dock Special Survey Costs and Other Capitalized Items, and a 0.1 million decrease in interest income. Moving to the 12-month 2021 period, time charter revenue reached 713.2 million compared to 226.8 million in 2020. The result was a combination of the expansion of our fleet and the improved time charter equivalent rates. As mentioned earlier, available days increased by 83%, while our fleet time charter equivalent rate increased by 73.7% to $21,709 per day compared to $12,497 per day for the same period in 2020. The average 2021 time charter equivalent rate achieved by sector-wide Bulkers $23,331 per day, containers $22,435 per day, and tankers $15,336 per day. Fleet utilization was approximately 99%. EBITDA and END income in 2021 include an 80.8 million gain in equity in earnings of affiliated companies, a 48 million bargain gain upon obtaining control of an obvious acquisition and upon completion of the NMCI merger, a 33.6 million gain related to the sale of eight of our vessels, and a 10.4 million and 10.4 million of transaction costs in relation to NMCI and NNA merger. Excluding these items, adjusted EBITDA increased by 326.7 million to 426.5 million in 2021 compared to 99.8 million in 2020. The increase in adjusted EBITDA was primarily due to a 486.4 million increase in time chart and volume expenses and a 4.9 million increase in net loss attributable to non-controlling interests. The above increases were partially mitigated by a 97.7 million increase in vessel operating expenses, a 25.1 million increase in time chart and voyage expenses, a 17.5 million increase in general and administrative expenses, a 13 million increase in direct vessel expenses Excluding the amortization of deferred dry dock special survey costs and other capitalized items, a 10.2 million increase in other expenses net and a 1.1 million decrease in equity in net earnings in affiliated companies. The above increases in expenses were mainly due to the expansion of our fleet. Net income for 2021 exceeded half a billion whereas on an adjusted basis it reached 364.1 million compared to 9.9 million for the year ended December 31st 2020. The increase in adjusted net income was primarily due to a 326.7 million increase in adjusted EBITDA and 108.5 million increase in amortization of available lease terms recorded in the year end of December 31st 2021 and a 0.3 million increase The above increases were partially mitigated by a 56.7 million increase in depreciation and amortization expense, an 18.6 million increase in interest expense and finance cost net, and a 6 million increase in amortization of deferred dry dog special survey costs and other capitalized items. Turning to slide 15, I will briefly discuss some key balance sheet data. As of December 31st, 2021, cash and cash equivalents were $169 million. Long-term borrowings, including the current portion, net of deferred fees amounted to $1.36 billion. Net debt-to-book capitalization was at the comparable level of 38%. Slide 16 highlights our balance and strength. Our debt is 3.5 times covered by the value of our fleet based on publicly available valuations. Following the completion of the new 55 million facility mentioned earlier, we would have minimal debt maturities in 2022, while our current maturity profile is staggered with no significant balloons due in any single year. Turning to slide 17, you can see our ESG initiatives. Maritime shipping is the most environmentally friendly means of transportation as it is the most carbon efficient mode of transport. We aspire to have zero emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations up to two years in advance, aiming to be one of the first fleets to achieve full compliance. Navios is a socially conscious group whose core values include diversity, inclusion and safety. We have very strong corporate governance and a clear code of ethics. Our board is composed by majority independent directors and independent committees that oversee our management and operations. Slide 18 details our company highlights. Navios Partners is one of the largest US publicly listed companies. Shipping companies. Our diversification strategy creates resiliency and enables us to mitigate individual segment volatility. Our diversification scale and financial strength should make NMM an attractive investment platform as we take advantage of global trade patterns. I now pass the call to George Akhniotis, Executive Vice President of Business Development, to discuss the industry section. George?

Thank you, Eli. Please turn to slide 20 for the review of the drive-back industry. The IMF projects global GDP growth at 4.4% for 2022, led by a 5.9% expansion in China, India, and developing Asia. 2022 drive-back rate is projected to increase by 2%. Similar to last year, most of the increase is expected to happen in the second half of the year. Rates in all asset classes reached 10-year highs in 2021, Reflecting strong demand for bad commodities, aided by fleeting efficiencies due to the pandemic. The BDI peaked at 5,650 on October 7th, the highest level since 2008. The market then retreated on the back of Chinese winter steel production limits and a surprising temporary ban on Indonesian coal exports. The BDI continued to retreat at the start of 2022, falling back below 1,500. for the first time in 12 months. However, recent efforts by the Chinese government to stimulate the economy and the expectation of increased steel production along with commencement of the South American grain export season should provide a market adapter. Turn to slide 21. Post-pandemic stimulus measures in the advanced economies and increasing industrial production have fueled demand for the three major bulk cargoes, specifically Seabourn Iron ore trade is expected to increase by 1.2% in 2022, with second half 2022 imports increasing 8.7% over the first half, as reduced pollution restrictions allow an increase in Chinese steel production. Gas prices have exceeded coal prices since August 2021, and the trend is expected to continue. In spite of stated goals of carbon neutrality, the gas price surge has driven power plants to switch back to coal-fired power generation. Accordingly, seaborne coal imports are expected to grow by 2.4% in 2022. With the same seasonal pattern as iron ore in play, the second half 2022 coal demand is expected to grow by 8.2% over the first half. On the grain side, the global grain trade continues to be supported by an ever-increasing world population, food security issues driven by the pandemic, as well as an increasing protein demand worldwide. World grain production for the 2021-22 crop year will reach a record according to the USDA. Global grain trade has been growing by about 5% cargo since 2008, mainly driven by Asian demand. Please turn to site 22. The current order book stands at 6.7% of the fleet, one of the lowest on record. Net fleet growth for 2022 is expected at only 2%. Vessels over 20 years of age are about 8.5% of the total fleet, which compares favorably with the historically low order book. In concluding our dry park sector review, strong demand for natural resources, combined with continuing COVID-related logistical disruptions, and a slowing pace of new building deliveries all support healthier freight rates. Fleet growth is expected to decline further in 2023 as owners remove damage that will be uneconomic as the IMO 2023 CO2 rules come into force. Please turn to slide 24, focusing on the container industry. Demand for goods in the US and Europe continues to rise in the latter part of 2021, increasing both container trades and supply chain bottlenecks. At the start of 2022, freight rates are at or near record levels, allowing us to log in long-term contracts at historically high rates. As you can see in the blue box on the lower right, Increases in demand for goods, poor congestion, and the restocking led to container ship demand growth of 6.1% in 2021, with further growth of 3.8% expected in 2022. Turn to slide 25. Net fleet growth is expected to be 3.6% for 2022. Even with the increase in new building orders, demand is forecast to outpace net fleet growth. It should be noted that about 72% of the order book is for 13,000 TEU vessels or larger. In addition, 10.3% of the fleet is currently 20 years of age or older. In conclusion, positive demand fundamentals mainly due to the change in consumer purchasing patterns and resulting supply chain bottlenecks along with reduced fleet availability should continue to support the containerized shipping industry in 2022. Please turn now to slide 27 for the review of the tanker industry. Global oil consumption is recovering, although with modest growth due to the continued pandemic disruptions. However, OPEC Plus continues to increase supply by 400,000 barrels per day on a monthly basis until mid-year, when all production cuts are eliminated. The IEA projects oil demand to exceed pre-pandemic levels by Q3 2022. as recovery in the travel industry spurs additional fuel consumption. There is an approximate 90% correlation of West oil demand with global GDP growth and about two-thirds of seaborne product trade is related to transportation. Thanks to slide 28, VLCC net fleet growth is projected at only 1.8% for 2022. This decline can be partially attributable To owners' hesitance to order expensive, long-lived assets in light of macroeconomic uncertainty and engine technology concerns due to upcoming CO2 restrictions. The current order book is only 7.5% of the fleet. Vessels over 20 years of age are 11.1% of the total fleet, which compares favorably with the low order book. Finally, 10-29, product tanker net fleet growth is projected at only 0.6% for 2022. The current product tanker order book is 5.2% of the fleet, one of the lowest on record, and it compares favorably with the 7.8% of the fleet which is 20 years of age or older. We believe that the overall tanker order book and fleet are well balanced as the IMO 2023 and PALAS Water Management Regulations will lead to some vessel retirements in the coming months. In concluding, the tanker market continues to remain challenged in Q1. However, the combination of global oil demand returning to pre-pandemic levels by mid-year, OPEX Plus increasing production, OECD inventories retreating below their five-year average, and the lowest order book in three decades should provide for healthy tanker earnings in the near term. This concludes my presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

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

At this time, if you would like to ask a question, please press star 1 now on your telephone keypad. To withdraw yourself from the queue, you may press the pound key. Once again, that is star 1 on your telephone keypad. We'll take our first question from Randy Gibbons of Jefferies. Howdy Team Navios, how's it going?

Good morning. Good morning.

Good morning. So you've been fairly active as both a buyer and a seller here in the container S&P market. How do you view your tanker and dry bulk fleets? How do you balance buying new assets and selling some of those older ones?

Very good question. Randy, this is about, you know, this is also the first quarter that we did as a diversified company, and what you have seen is that we are busy creating value. We took advantage of the container sector, buying new building vessels, acquiring, hedging, creating cash flows that will take total, the cash flows will bring zero residual value risk and having young assets and also creating five and seven-year cash flows of over 2.2 billion. If you look now on the dry bank, we have a very nice fleet and we are looking at the market that we cover, so we have 75% on market exposure. Q1 is seasonally low, but we see that the market can be Thank you very much. and really the tanker on the other side is the big jewel that the kind of fleet we have. We have seen that during NNA times, this kind of fleet can generate in good years over 200 million of EBITDA. So that can be an additional swing. Of course, we can say that Omicron and the kind of event that happened pushed later the tanker recovery and therefore we have seen that now we are in a situation where we can enjoy both sectors and also the tanker is a jewel. So it's all about driving an AV which will drive a stock price. That is a big issue.

Got it? All right, that makes sense. And now I guess the most important question, right? Your revenue backlog is massive, EBITDA is going to exceed, I don't know, 600 million, could be closer to 700 million, both this year and next. However, your current distribution is about 1% of that, right? $6 million on an annual basis. So when should we expect to see an increase to the distribution? And then secondly, as you mentioned, NAV accretion, right? Your NAV is north of $60, probably closer to $80. However, your shares are trading at $30. So why not repurchase units at these levels?

Listen, we are busy creating NAV. And unlike other companies, NAV, which is a product of the market, our NAV is a product of our activities. And you have seen us busy doing this from last year. And we are... We have our stock price has been the best performing last year, not only at the stock price, but also if you take the total returns of our peer. So this is an ongoing process. And it's important to take advantage of the different segments. What we did is take advantage of the container segment where we built cash flows We bought vessels at attractive rate and we sold at historical. So we are not silent at it. So it's about creating the growth of our cash flows. And with that, we see our stock price to follow. If we have sufficient working capital, as we have stated, and we have the investment capex, this is not about growth for growth. It's not about number of vessels. is about a cash flow return. So if we cannot see attractive in this way, we of course will follow with a different strategy of buying back. So we have a fleet of 145 vessels more or less. You need a working capital of, let's say, 2 million per vessel. We have our investment capex, which you have seen in a lot of our slides. And also we are seeing how we create attractive cash flows and returns. You have seen it from our new buildings. You have seen how that translates to actual cash flows. So this is what we are doing.

Got it. All right. We are definitely looking forward to seeing that return of capital, but thanks again.

Thank you.

We'll take our next question from Omar Nocta of Clarkson Securities.

Thank you. Hi, guys. Good afternoon. Good morning. Yeah, thanks for the update today. I just wanted to ask about, you know, where you've been fairly active here recently on the container side. First off, just to want to double check, in your last quarterly report, if I recall, you mentioned having taken your new building order book for the 5300 to use to six shifts, and those were fully chartered. I just want to confirm that that order is now up to 10 shifts as of today, also fully contracted. Is that correct?

Yes Omar, and I remember in the last call, I was thinking that that will not be, you know, I was not thinking that it will be very possible to extend, but, you know, we managed to have, we had options, we managed to exercise, and we managed to totally hedge that position at an even better rate, and with zero residual, with no residual value risk. So, yes, we now have a 10 fleet, which gives us a The ability to replace also our fleet, which is a very important issue on really looking at a fleet of vessels that have an average age. And if you have seen, we have actually managed to reduce the average age versus the industry.

Right. We have definitely a unique opportunity to order these vessels against long-term charters that, as you say, basically remove the residual risk at the end of the contract. and just maybe generally in terms of where the market is today, you know, for further new buildings and your appetite, could you maybe just give us some color because, you know, liners last year were quite active, you know, securing long-term chargers against new buildings, you know, for large and mid-size ships. That seems to maybe have slowed recently, but there really is now, you know, a big focus on chartering what's available again in the market today as, you know, you've highlighted here in your report today. Can you maybe give just some color on what you're seeing from this point on, on the new building front? Are there still opportunities like, you know, the one that you've done here on the 5300s? Is there still an appetite for that? Are liners looking for that bustle class now in larger numbers? Or are they still kind of fixated on the bigger size? Or is it kind of maybe just quieted overall? Any color you can give on that front.

Listen, I will never say never, because as I learned last quarter, there can always be opportunities and there is different needs on the line. We have also seen that because they want vessels in the water as possible, part of the things we have seen with the liners is this and the historic sailors we did. $220 million for the 16-year-old vessels that we'll be delivering in the second half. So basically, the liners want to secure vessels as soon as possible. And the alliances will play in different segments. Other ones want to have ownership of the vessels. Others want charter. So it's different models depending on the liners. and there is a strength of course at one point we have to say that the pandemic will ease and at one point you should have less of this kind of opportunities but it seems that it is going very strong just think about the value that we showed the two vessels was the market cap more than the market cap that we had last year in Q4 in 2020 in the last quarter so You see what kind of a powerful situation can be. But I think that the new buildings will be less of an issue right now. I think it's more vessels in the water.

Okay. Thanks, Angeliki. And maybe just to follow up and, you know, maybe just kind of speak to, you know, the reimagined public shipping company, at least in Navios' case with the diversification strategy. You know, speaking of the 8,200 EU ships that you sold, Thank you very much. Thank you very much.

on where the market is, who will not take a speculative order, do a speculative order on vessels. Because I think it's not prudent. I mean, you have seen where the container sector is. It's in an all-time high. That will be an extremely risky business. Now, the beauty is that we can always do dry bulk and tankers. And it's purely about the opportunity. It's about where you can either secure or either have the app site where it can give you four times the valuation or the cash flows or the overall return. So this is what we like to do.

Understood. Very clear. Thanks, Angeliki. I'll turn it over.

Thank you.

And once again, if you'd like to ask a question. That is star one now on your telephone keypad. We'll move next to Chris Weatherby of Citigroup.

Hey, thanks. Good morning. This is Eli Whiskey on for Chris. If we can just go back to the sales on the container ship side. So 10.3% of the container ships are over 20 years old. You guys just sold two of them about 16 years old. Just curious if you guys have any more appetite for sales in container ship. And then going off of that, if further sales there would help play into the strategy of fuel efficiency regulation.

These vessels are not exiting the sector. What I will say is that Navrius takes an opportunity on the segment and we have a strong performance on the segment. We will either sell a vessel or we charter it at a rate that will give us a better return. It's a decision we make with taking consideration cash flows and Kredit Worthings of the Counterparty. Sorry, that's exactly what we are doing constantly. And we care about is to cover positions that are further in the future. That is how we work our portfolio.

So, I mean...

and of course what we are doing and this is you can see it on our new buildings what we are doing we are getting the younger generation fuel efficient vessels so for us this is a win-win situation if you are able to dispose of older vessels less green to younger vessels this is a win-win situation and you are trying hard to do it at any point and basically it's an ongoing process If you look in our presentations, we have, you know, we have 18 new buildings while the vessels, you know, very close to the vessels that are 15 to 20 years. So this is a long-going process that we will be doing.

That makes sense. And then I just need to ask you about congestion. You guys talked about it at the top of the call, but just digging in, you know, on the west coast of the U.S., we've seen ships move downwards off the coast. Ships in transit from Asia over seems to be relatively steady. Do you think we could have reached an affliction downwards, or is there something else that we're not thinking of right now on that side from Asia to the U.S.?

I think that Omicron, you know, there's experts that will give you all the flows of vessels, and I think when... Wall Street Journal you have sitting being in the front line of Wall Street Journal and congestion it means it's to everyone's mind and I'm sure there is a lot of information on that. I think the important issue that if we see in a macro level and we have to think about in January we have an outbreak with Omicron that you had more sick people around the planet than from the period of the Spanish flu so basically that delayed Thank you, Angeliki. Thank you all.

And this does conclude our question and answer session for today. I'd be happy to return the call to Angeliki for any concluding remarks.

Thank you.

This concludes our conference for today. You may now disconnect your lines and everyone have a great