Navios Maritime Partners LP

Thank you for joining us for Navios Maritime Partners first quarter 2022 earnings conference call. With us today from the company, our chairwoman and CEO, Ms. Angeliki Frangou, Chief Operating Officer, Mr. Stratos Desypris, Chief Financial Officer, Ms. Eri Tsironi, and Executive Vice President, Business Development, Mr. Georgios Akhniotis. As a reminder, this conference call is being webcast. To access the webcast, please go to the investor section of the Navios Partners website at www.mavius-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 Mavius Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of NAVIUS 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 NAVIUS Partners filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. NAVIUS 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, Ms. Tsironi will give an overview of Navios Partners financial results. Then, Mr. Akhniotis 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, Ms. Angeliki Frangou. Angeliki?

Thank you, Daniela, and good morning to all of you joining us on today's call. I am pleased with the results for the first quarter of 2022. During the first quarter, Navios Partners recorded revenue of $236.6 million, EBITDA of $126.1 million, and net income of $85.7 million, or $2.78 per common unit. Sadly, Ukraine is being ravaged by a war in its third month with significant cost in human lives. The war is also having an impact on global seaborn commodity trade. Ukraine and Russia are significant exporters of grain and other mineral commodities. Russia also exported oil, gas and coal. Sanctions in the war have resulted in the displacement of those exports by other commodities being transported over longer distances. thereby adding to Don Miles. The situation is fluid and we have no crystal ball to understand how this will evolve. In the meantime, governments and companies are quick to act to satisfy their short-term needs as they consider long-term policy. Please turn to slide 3. In 2281, we reimagine the public shipping company. Today, NMM is one of the leading U.S. publicly listed shipping companies with an asset base diversified across 16 vessel types in three segments, servicing more than 10 end markets. About one-third of our fleet operates in each dry bulk, container ship, and tiger segments, and we believe that this structure offers a stronger, more resilient entity to our stakeholders with a continuous opportunity for a creative growth. As previously announced, this quarter we agreed to acquire four Aframaxis LR2 tankers on the back of charter commitments from an investment-grade counterparty. Through this transaction, we added a new segment with reduced risk and excellent long-term prospects. Slide 4. present some recent segment data. An MM fleet of 150 vessels has an average age of 9.5 years and a loan-to value of 28.5%. The fleet has 4.1 billion of net equity value. Moreover, we have 2.8 billion in contracted revenue. Over approximately 35,500 available days for the remaining nine months of 2022, Almost half are exposed to market rates. This provides upside through the ongoing recovery in charter rates in the dry and tanker markets. Slide 5 summarizes a few basic principles behind the diversified platform. Number one, we can optimize chartering. In segments offering attractive returns, we can enter into period charters while in other segments we can be patient. Second, segments have some counter-cyclicality built in. This creates the opportunity of redeploying the strongest flow earned from performing segments into asset purchases in underperforming segments, where we believe attractive acquisition opportunities exist. Third, asset values themselves can be volatile. Leverage rates remain low only if asset values cooperate. 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 partially based on this diversity. I note that we are in a rising interest rate environment globally, as I will discuss In the moment, we have been working at securing fixed-rate financing and reducing the margin of debt from about 300 basis points to about 200 basis points. We see the cost of debt increasing, which provides yet another reason to be conservative with the amount of debt on our balance sheet. On slide 6, We will drill down 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. Not surprisingly, we have fixed our container fleet on long-term charters with almost 100% of our available container ship days fixed for the remaining nine months of 2022. This reduces market and residual risk for these vessels. We manage the credit risk of the long-term charter independently to ensure that we are not simply trading one risk for another. In our dry bulk segment, we benefit from a market where rates are recovering to their historical 20-year averages. We have fixed only 24% of our available dry bulk fleet days for the remaining nine months of 2022, and we have opted to keep 76% of our available days exposed to market rates to capture any available upside. Our chartering strategy also allows us to fix a drive-back fleet on longer-term charters when rates do improve. Lastly, we have 53% of our available tanker days fixed, many with favorable legacy charters. We anticipate running this fleet on market rates until healthy rates allow us to consider period charges. We expect our target fleet will generate strong returns once the market recovers. As I mentioned, we not only have the luxury of waiting for this recovery, but also extend into subsectors such as the Afromax LR2, given the strength of our other segments. Slide 7 details our approach to capturing segment opportunity and our approach towards pairing our S&P activity with sector fund amendments. NMM made $1.3 billion investment in 22 new-build investors that will deliver to our fleet through the first quarter of 2025. We leverage the strength of the container market. First, we sold to 16-year-old vessels for $220 million. And second, we had a $620 million investment in 10 new 5,300 TEU container ships by entering into long-term credit-worthy charters for these vessels. These 10 container ships will earn about $710 million in contracted revenue for 5.2 years duration of the related charters. and are currently worth about 20% more than our older prices. We also engage in a routine and continuous management of our fleet age profile in the dry bulk and tanker space. Seven dry bulk and five tanker vessels were acquired at attractive prices. In our dry bulk segment, NMM made $332 million investment in seven new buildings ordered when vessel values were challenged in the first half of 2021. These results are also worth about 20% more today. Slide 8 reviews our recent developments. In the first quarter of 2022, NMM generated $236.6 million in revenue, $126.1 million in EBITDA, and $85.7 million in income. During the quarter, we entered into a new tanker subsector when we agreed to acquire four new-building Afromaxis LR2 vessels. These vessels are designed with the latest technology and can carry either crude or products. The page acquisition price was $58.5 million per vessel, and we will also pay $4.2 million more for additional features and improvements. Two of the vessels have been chartered out for five years at a net rate of $25,576 to an investment-grade counterparty. During the five-year period, each of these charters will earn $30.3 million in aggregate debt, representing a 10% annual yield. Keeping scrap value in mind, at the end of the charters, the residual value will be 31% of our purchase price while the vessel will still have 20 years of useful life. For the remaining two vessels, the charterer has an option to charter the vessels at the same terms and the option is exercisable by mid-October 2022. The new building VLCC acquired in 2020, delivering into our fleet in July 2022, was fixed on a two-year bare-bore charter to an investment-rated Japanese oil major at a floating rate with a floor of $22,572 per day and a ceiling of $29,700 net per day. NMM, P&L is healthy and the balance sheet remains strong. As of March 31st, 2022, we have about 108 million in cash. The size of our balance sheet cash has a number of considerations including new vessel capital commitment and fleet working capital. Consequently, I would expect that we will hold considerably more than our current cash balance. Consider only our working capital of our own fleet size, we estimate an approximate cash balance that will be around 2 million per vessel. Leverage is 28.5% LTV as of March 31st, 2022 and have a targeted maturity profile. NMM has a 2.8 billion in contracted revenue. For the remaining nine months of 2022, Our contracted revenue already exists forecasted expenses by almost $70 million. Moreover, out of our 35,500 available days, almost 16,000 of the 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. Stratios Desypris, our COO, who will walk you through the next few slides. Stratos.

Thank you, Angeliki, and good morning, all. Navios Partners is differentiated by its industry-leading scale and diversified sector exposures and opportunity for continuous accredited growth. Slide 9 details our strong operating free cash flow potential for the remaining nine months of 2022. We have contracted 55.4% of our about 35,500 available days at an average rate of $28,697 per day. Our contracted revenue exceeds total cash expenses by almost $70 million, and we still have 15,829 days with market exposure that will provide additional operating cash. The majority of our market exposure comes from our dry bark vessels, where approximately 76% of our available days are open or contractible index-linked charters. In slide 10, you can see our fleet profile. We are engaged in a renewal process which is a constant balancing effort. We would like to be proactive and capture cyclical opportunities while allocating capital. As you can see at the bottom of the slide, we have 24 vessels that are over 15 years of age, while at the same time, we have 22 new building vessels to be delivered from the third quarter of 2022 through the first quarter of 2025. Moving to slide 11, We continue to secure low-term employment for our fleet. As Angeliki mentioned, we recently entered into a new tankage segment, the Aframax LR2. We charter out two of these vessels, commencing in 2024 for five years, at $25,576 net per day. This will generate approximately $93 million of contracted revenue. As to our hour of chartering activity, which are the new building DLCC delivering in July 2022 on a bare-bottom basis for a period of approximately two years at a floating rate based on index with a floor of $22,572 and a ceiling of $29,700 net per day, adding operating expenses of approximately $10,000 per day The message will earn a floor of $32,572 and a ceiling of $39,700 net per day on the time-charted equivalent basis. We charter out one 4,250 TEU container ship for approximately 5.2 years at an average net rate of $40,743 per day, generating approximately $76 million of contracted revenue. Following these recent fixtures, our contracted revenue amounts to $2.8 billion. 79% of our contracted revenue comes from our container ships with charters extending through 2030 with a diverse group of quality counterparties. Around 40% of this contracted revenue will be earned through the end of 2023. I now pass the call to Eri Tsironi, Navios Partners CFO, who will take you through the financial highlights. Eri?