Navios Maritime Partners LP

Thank you for joining us for NAVLUS Maritime Partners Second Quarter 2023 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. Eri Tsironi, and Vice Chairman, Mr. Ted Petron. As a reminder, this conference call is in webcast. To access the webcast, please go to the investor section of Navios Partners website at www.navios-mlp.com. You'll see the webcast link in the middle of the page and a copy of the presentation reference 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 could 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. Petron 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?

Good morning to all of you who join us on today's call. I am pleased with the results for the second quarter of 2023, in which we reported revenue of $346.9 million and net income of $112.3 million. We are pleased to report a net earnings per common unit of $3.65 for the quarter. Navios Partners is a leading publicly listed shipping company diversified in 15 asset classes in three sectors with an average vessel age of about 9.8 years. We have 175 vessels split roughly equally into three sectors based on a charter-adjusted value. The macro environment is challenging. Trade patterns continue to be impacted by the war in Ukraine China has experienced anemic economic growth since it exited the pandemic and currently appears to be addressing potential deflation. The West, while relatively healthy, is dealing with inflation while fearing recession. Whether dry, container or tanker, there is a great deal of uncertainty about future prospects. We continue to focus on things that we can control, such as reducing our leverage rate. Our stated goal is to reduce leverage so that our net LTV falls within the range of 20-25%. This past quarter, net LTV ticked up slightly because of some deterioration in steel value. However, our accumulated cash offset most of this decline. I mention this prominently so that you can understand how important with you this single metric. Please turn to slide 7. As you can see, we have 270 million of cash on our balance sheet, an increase of approximately 57 million per last quarter. We are investing our net cash through our treasuring function and earning about 5% on an annualized base in the second quarter of 2023. We secured 350 million of new financing in the second quarter of 2023. About 288 million was used to refinance 36 vessels at an average margin of 2.4%. The remaining 62 million was used to finance two additional MR2 new building vessels at an implied fixed interest rate of 7%. Overall, our current weighted average interest rate is 7%. This consists of 5.6% average interest on our fixed rate debt, representing 36% of our debt, and 7.8% average interest on floating rate debt, representing 64% of our debt. As announced, in the fourth quarter of 2022, we purchased two MR2 vessels for a total of $80 million. We expect to take delivery of these vessels in the second half of 2025 and the first half of 2026. We recently chartered these vessels out for five-year periods at a net rate of $22,959 a day per vessel. The overall economics of the purchase and charter can be summed up as follows. At the end of the five years, we expect to have earned aggregated a debt of $52.3 million while having only 20% residual value exposure with 20 years of remaining useful life. During the charter, we will enjoy 13% annual yield. Fleet Update. In 2023, year to date, we sold 13 vessels generating an aggregate sales proceeds of $242 million. We offset those sales with purchase of three vessels, including two additional MR2 new building vessels for $80.4 million. The two vessels are expected to be delivered in 2026 and 2027. Our operating cash flow is strong. For the remaining six months of 2023, our contracted revenue is expected to exceed total cash expense by $64.8 million. We have 8,146 open index days, so we expect to generate significant additional cash in the second half of 2023. Please turn to slide A. Since our transformation in 2020, our financial performance has been strong. Our second quarter 2023 adjusted EBITDA is 17% higher than the second quarter of 2022 and 112% higher than the second quarter of 2021. Looking backwards, 2022 was 57% higher than 2021 and almost 570% higher than 2020. We believe that our diversified business model can continue to perform in difficult markets. I now turn the presentation over to Mr. Stratos Desypris, Navios Partners Chief Operating Officer.

Thank you Angeliki and good morning all. Listen to slide 9 which details our strong operating free cash flow for the second half of 2023. We fixed 71% of available days at an average rate of $25,459 net per day. Our contracted revenue exceeds expected total cash expense for the remaining 6 months of 2023 by about $65 million. We have 8,146 open and index linked days that will provide additional profitability. Slide 10 demonstrates our diversified platform in action. We aim to benefit from countercyclicality by redeploying cash flows from well-performing segments into assets in underperforming segments. We believe a diversified asset base mutes volatility in our financial statements. You can see this dynamic playing itself out in our asset base. As of the second quarter of 2023, container values dropped by 4%, and dry bulk and tanker values decreased by 1%, respectively, compared to the fourth quarter values. In sum, the net change to our fleet value is a decrease of approximately 2%. Multiple segments also allow us to optimize shattering. In segments with attractive returns, we can enter into period shatters. In other segments, we can be pacing. Our container ships are 100% fixed at $38,200 net per day, Our tankers are 89% fixed at $26,088 net per day and our dry bulk fleet is 66% fixed at $14,620 net per day. As you can see from the chart on the bottom, overall we fixed 80% of our 13,779 total available days for the third quarter of 2023 at a net average rate of $24,543 net per day. Listen to slide 11. We are always renewing the fleet so that we maintain a young profile benefiting from newer technologies and more carbon efficient vessels. We have 1.4 billion remaining investment in 22 new building vessels delivering to our fleet through 2027. In containerships, we acquired 12 vessels for a total of 860 million, which we hedged by entering into long-term credit-worthy charters, generating about 1.1 billion in contracted revenue for about 6.5 years' average duration of the related charters. In the tanker space, we entered the LR2 Aframax subsector by ordering 6 vessels for a total price of approximately 380 million. These vessels have been chartered out for five years at an average net rate of $26,580 per day, generating revenues of approximately $290 million. We also ordered four high-spec MR2 vessels for about $160 million. Two of the vessels have been chartered out for five years at an average net daily rate of $22,959, generating revenues of approximately $85 million. The dry-bulk new building program of 8 vessels was completed in June 2023 with the delivery of a cape-sized vessel. We have also been active in opportunistically selling older vessels based on segment fundamentals. Year-to-date we have sold 13 vessels with an average age of approximately 14.5 years for 242.2 million. We sold 7 tanker vessels for about 160 million, taking advantage of strong tanker market. Also, we sold six dry bulk vessels for a total price of 82.4 million. Moving to slide 12, we continue to secure long-term employment for our fleet. As Angeliki mentioned earlier, in the second quarter we have created over 130 million additional contracted revenue. Approximately 85 million relates to five-year charters of 22,959 dollars net per day on two new building MR2s, and about 47 million relates to three existing tanker vessels. Our total contracted revenue amounts to 3.3 billion, of which 0.9 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 extending through 2037 with a diverse group of quality counterparties. About 55% of our contracted revenue will be earned in the next 2.5 years. I will now pass the call to Erifili Tsironi, our CFO, who will take you through the financial highlights.