Navios Maritime Partners LP

Thank you for joining us for Navios Maritime Partners' second quarter 2022 earnings conference call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou, Chief Operating Officer, Mr. Stratos Desypris, Chief Financial Officer, Ms. Eris 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 considerable 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 Navios 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 give an overview of Navios Partners segment data. Next, Ms. Tsironi will give an overview of Navios Partners financial results. Then, Mr. Akhniotis will provide an operational update and 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. We are pleased to report our results for the second quarter of 2022, in which we recorded $280.7 million of revenue and $118.2 million of net income. For the first six months of 2022, Net income is equal to $6.62 per unit. We are also pleased to discuss the transaction we announced last night involving the acquisition of a 36-vessel dry-bulk fleet for $835 million. Today, NMM is the second largest U.S.-listed maritime company and the third largest U.S.-listed dry-bulk company. Really we are just about tied for second, both by number of vessels. Before we dive into the details, I wanted to briefly review our business model that has allowed us much of this. Slide 3 shows the pro forma composition of our fleet by vessel type and segment. We have about 15 different vessel types operating in 3 segments. The average age of our vessels in each segment is below the industry average which matters as it relates to carbon efficiency of our various fleets. Turning to slide 4, we continue to leverage diversification. We believe that diversification allows us to optimize chartering by extending charters in well-performing segments and keeping charters duration short in less well-performing segments. In addition, we can make acquisitions that we hope will benefit from cyclical volatility such as the acquisition announced last night. Slide 5 takes a look at selected segment data pro forma for the acquisition. If you look at the asset and market value category, you will see the rebalancing of our portfolio as a result of this acquisition on a pro forma basis. Dry bulk shipping represents about $2 billion of exposure, or 32.5% of total fleet value. This material increase should benefit us in the medium term. You will also notice, as Stratos will address in a moment, that although there has been some movement in the value of each sector, net the NAV has moved up in 2022 year-to-date. In addition, I would like to mention that our LTV has moved up as a result of this transaction, but it is still reasonably low at 33.8%. We will continue to focus on our target leverage ratio of 20%. While we will exceed this from time to time based on market movement, acquisition and other factors, we will use this as a guide in managing our financial affairs. Please turn to slide 6, where we discuss some of the details of this transaction. We acquired a 36-vessel dry-bulk fleet with a 3.9 million tetrawatt-tons capacity. The fleet has an average age of 9.6 years. The fleet has 26 owned vessels and 10 chartered-in vessels, all with purchase options. This was a non-cash transaction for a gross purchase price of $835 million. Of this purchase price, $441.6 million involves the assumption of various liabilities and obligations. The remaining $393.4 million represents equity. The purchase price is subject to customary debt and working capital adjustments. We anticipate that the first closing covering 15 vessels will happen tomorrow and the second and final closing for 21 vessels should occur by the end of August 2022. I note that this transaction was unanimously approved by the Conflicts Committee of Navios Partners and the full Board of Directors. The Conflicts Committee also retained its own legal and financial advisers. Slide 7 goes through the rationale of this transaction. We acquired a young, known and blocked fleet of 36 vessels at an opportune time in the dry bulk market. We read the recent weakness in the market as a momentary pause while China deals with the internal issues but believe that by the end of Q4 much of this will have been resolved and China will return to the international purchasing table in a more robust manner. A diversification and low leverage allowed this transaction. Diversification provided a margin of safety as other sectors are working well and are relatively stable. Low leverage and strong balance sheet allow the acquisition with minimal impact on our cash flow and balance sheet. The acquisition itself provides scale and migration path to a younger, more carbon efficient fleet. We can opportunistically sell older, less carbon efficient vessels. Post-transaction, the dry bulk and total fleet will increase by 67 and 24% respectively. We also believe that the expected financial returns based on the assumptions we share in our deck are compelling. Among the metrics we share in our deck, I know that the cash return on equity is expected to be 20% in 2023. Turning to slide A, we review the and other recent developments. During the quarter, we acquired two new buildings LNG 7700 TU container ships for $241.2 million. Delivery is expected in Q4 2024. At the same time, we head our position by entering into a 12-year charter that will generate about 370 million in revenue. The average rate is $42,288 per day. Navios may extend existing charters to generate an additional $5 to $10 million in total. In terms of a financing update, you will see that we entered into about $140 million of financing covering six vessels with reasonably low LTVs. The commercial activities we fixed $3 billion contracted revenue, much of this in the container space. As a result, we have established an internal credit unit to monitor credit quality of our counterparties so that we are adequately prepared for any contingency. For 2022, in the second half of the year, we have 13,997 open index days. The good news is that Contracted revenue exceeds total cash expenses by $18.7 million, so our revenue book has a significant upside. Finally, our board authorized a unit repurchase program for $100 million. At current prices, this program would cover approximately 15% of common units outstanding, and 17% of the public float. The timing of the purchases and the exact number of units to be repurchased shall be determined by the company based on market conditions and financial and other considerations, including working capital and planned or anticipated growth opportunities. We continue to believe that total return is the way to measure the success of our company and we will use this tool as a means of achieving this result for our unit holders. At this point I would like to turn the call over to Mr. Stratos Desypris, our Chief Operating Officer. Stratos?

Thank you Angeliki and good morning all. Slide 9 details our strong operating free cash flow potential for the remaining 6 months of 2022. Proforma for the acquisition of the 36 vessel fleet discussed by Angeliki earlier, we have fixed 51.3% of an estimated 28,800 available days at an average rate of $28,966 per day. For the second half of 2022, contracted revenue exceeds total cash expenses by almost 19 million, and we have 13,997 available days with market exposure providing additional operating cash. The majority of our market exposure comes from drive-out vessels where approximately 78% of our available days are open or contracted on index-linked charters. Slide 10 demonstrates the basic principles of our diversified platform in action. We benefit from segments counter-cyclicality. This creates the opportunity to redeploy cash flow from well-performing segments Thank you for watching this video. In segments with attractive returns, we can enter into period charters. In other segments, we can be patient. As you can see from the chart on the bottom, 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 containers in days fixed for the remaining 6 months of 2022. This reduces market and residual risk. We manage the credit risk of the long-term charters independently to ensure 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 22% of available dry bulk fleet days for the remaining 6 months of 2022 and have opted to keep 78% of available days exposed to market rates to capture any available upsides. Our goal would be to fix our dry bulk fleet on long-term charters when rates improve. Lastly, within tankers, current charter rates have been recently surpassed their 20-year average levels. We have increased fixing of our available tanker days to 62%, taking advantage of an improving market. We expect our tanker fleet will generate strong returns as the market continues to recover. In slide 11, you can see our fleet profile. We constantly renew our fleet to maintain a young profile, benefiting from newer technologies and more carbon-efficient vessels. Navios Partners made a 1.4 billion investment in 22 new building vessels that will deliver to our fleet through 2025. In container ships, we agreed to acquire 12 vessels. In the first deal, we agreed to acquire 10 5,300 TU container ships for 620 million. We then hedged our investment by entering into long-term credit-worthy charters generating about 710 million in contracted revenue for the 5.2 years duration of the related charters providing an expected unlevered yield of 17.5%. As Angeliki mentioned earlier, we agreed to acquire two 7700T ULNG dual fuel container ships for a purchase price of 241.2 million. The vessels have been chartered for 12 years at an average rate of $42,288 net per day generating approximately 370 million in revenue. These vessels are expected to provide an unlevered yield of about 10.5%. We also leveled the strength of the container market by selling two 16-year-old vessels for an aggregate price of 220 million. In the tanker space, we entered the LR2 Aframax subsector by ordering four vessels for a total price of 234 million. Two of the vessels had shattered out for five years at an average net rate of $25,576 per day, generating revenues of approximately $93 million, providing expected unlevered return yield of about 10%. The Charter has the option to charter the other two vessels at same terms. Moving to slide 12, we continue to secure our long-term employment for our fleet. Our contracted revenue amounts to $3 billion, and 81% of our contracted revenue comes from our container ships with charters extending through 2036 with a diverse group of quality counterparties. Around 50% of this contracted revenue will be earned in the next two and a half years. I now pass the call to Eri Tsironi, our CFO, which will take you through the financial highlights. Eri?