Navios Maritime Partners LP

Thank you for joining us for Navios Maritime Partners Second Quarter 2024 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangoult, Chief Operating Officer, Mr. Statos Desipris, Chief Financial Officer, Mrs. Erit Sironi, and Vice Chairman, Mr. Ted Petroni. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors 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 Navi'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 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. Frango will offer opening remarks. Next, Mr. Vesipis will give an overview of Navios Partners segment data. Next, Ms. Cerrone 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 Frangu. Angeliki?

Good morning to all of you and thank you for joining us on today's call. I am pleased with the results for the second quarter of 2024. We reported revenue of $342.2 million and net income of $101.5 million for the quarter. Earnings per common unit was $3.30. In the second quarter, regional conflicts, particularly in the Red Sea, continued to impact marine transportation. The net result has been longer than miles for the similar volume of goods as people are avoiding the Red Sea and taking the route around Africa. It seems that the global inflation we all experience post-pandemic is subsiding. And while the U.S. and European economies are generally healthy, China's economy is challenged by a troubled real estate sector and fading domestic consumption. We are watching carefully to determine whether China's economic walls weaken its otherwise voracious appetite for commodities. As you can imagine, with China's economic stalling, we have a cautious view. But we are also cautious because of geopolitical considerations. The conflict in Ukraine continues with no resolution in sight. The Middle East is on the edge and things can go badly quickly if some sort of new equilibrium is not established. Accordingly, we continue to execute on our strategic initiative by focusing on things that we can control, such as reducing levels and modernizing our energy-efficient fleet. Please turn to slide 7. Navios Partners is a leading publicly listed shipping company with 179 vessels diversified in 15 asset classes in three sectors. We have 318.4 million of cash on our balance sheet. I mentioned last quarter that we believe that we are in a gliding path to our target net leverage range of 20-25%. As you can see, our net LPV as of the end of the second quarter was 31.6%. Consequently, we turned some of our focus to returning capital to our unit holders. Under our dividend program, we pay a 20 cent dividend per unit annually. In addition, we have a 100 million unit repurchase program. Under this program, we purchase around 200,000 units through August to April for approximately $10 million. In total, so far in 2024, we have returned around $13 million of capital to our unit holders through dividends and unit repurchases. I would also mention that the purchase of our unit was a creative. The estimated NAV of our unit, based on our analyst average estimate, is around $140 per unit. Our per-unit repurchase price averaged at about $50. Thus, we captured an $18 million discount to NAV, which represents a net accretion of 59 cents per unit. We have around 90 million of availability under the unit repurchase program. The volume and timing of further repurchase will be subject to general market and business conditions, working capital requirements, and other investment opportunities, among other factors. Please turn to slide 8. We sold three vessels with an average age of 16.4 years in our effort at keeping a modern fleet. The sales to two MR2 tankers and one post-Panamax generated 64.6 million in gross proceeds and are expected to be completed in the second half of 2024. In terms of acquisition, we invested around 500 million in the following seven vessels. Four new buildings scrubber fitted Aframax LR2 tankers, two new buildings methanol ready scrubber fitted 7900 TEU container ships, one Japanese built Ultra Handy Max previously chartered in. We also took delivery of four previously announced new building vessels. Five thousand three hundred EU container ships fixed at an average rate of $37,050 net per day for 5.2 years, and one Aframax LR2 tanker fixed at 26,366 net per day for five years. we continue to add to our contracted revenue, which today is around 3.7 billion. In the second quarter and third quarter, quarter today, 2024, we added 561 million contracted revenue, of which 307.3 million was from six new building AfraMax LR2 tankers fixed at an average rate of 28,000 and $67 net per day for five years. 125.6 million was from two new buildings, 7,900 TEU container ships, fixed at a rate of $43,000 net per day for four years, and 128.1 million from 4,250 tiered-view container ships fixed at an average rate of 28,116 net per day for 2.1 years. Our operating cash flow potential remains strong. For the second half of 2024, contracted revenue exceeds total cash expense by $87 million. Plus, we have 7,395 remaining open index days, or 27% of available days for this period. Please turn to slide 9. We provide an overview of the evolution of our fleet through selected metrics we feel are important. As you can see, our fleet is only slightly larger than it was in the year end 2022 after a significant modernization program. Our fleet age remains about the same. We maximize energy efficiency by maintaining a fleet of useful vessels with the latest technology while we patiently await the development of more carbon-nutrient technologies. In addition, as you can see from vessel values, the steel value of our fleet has improved by about 27% since the end of 2023. I would like to point out that much of this improvement has been from volatility in the container ship segment, which dropped significantly post-pandemic and has recovered in 2024 as a primary beneficiary of the Red Sea conflict and longer torn miles. I would also note that these three values do not give any consideration to our contracted revenue, which today is about 3.7 billion. With a stable and performing fleet, our financial metrics are strong. Our adjusted EBITDA is up 2% over first half of 2023 and 22% over first half of 2022. Our cash balance is approaching the reserve we have identified. Our current net leverage is 31.6% and material improvement since the end of 2023 and a path to reach our target net LTV of 20-25%. I am also pleased to report that we have negotiated new management and administrative arrangements to our fleet with our existing managers. Stratos will take you through these details. I now turn the presentation over to Mr. Stratos Desipris, Navios Partners Chief Operating Officer. Stratos?

Thank you, Angeliki, and good morning, all. Please turn to slide 10. In August, Navios Partners renewed its management and administrative services agreements with Navios Sheet Management Inc. The current agreements were lastly renewed in 2019 and are expiring at the end of 2024. Based on the new agreements, Navioship Management will continue to provide administrative services based on allocable costs with no extra fees. Additionally, Navioship Management will provide technical, commercial, and other services based on the following fee structure. $950 per day technical management fee for own vessels, 1.25% commercial fee on gross revenues, S&P fee of 1% on purchase or sale price, and fees for other specialized services, for example, supervision of new building vessels. The new management and administrative services agreements will commence on January 1st, 2025, for a term of 10 years, renewing annually, and subject to a fee for termination or change of control. The agreements were negotiated and approved by the Conference Committee of the Board of Directors of Navios Partners, The conflicts committee used Watson, Farley and Williams as their legal advisors, and KP&G as their financial advisors, who issued the firm's opinion. Please turn to slide 11, which details our operating free cash flow potential for the second half of 2024. We fixed 73% of available days at a net average rate of $26,245 per day. In short, contracted revenue exceeds total cash expense by $87 million. and we have 7,395 remaining operon index link days that should provide substantial additional precast flow. On the right side of the slide, we provide our 27,878 available days by vessel type so that you can perform your own sensitivity analysis. Please turn to slide 12. We are always renewing the FLIP so that we maintain a young profile. It is part of our strategy to reduce our carbon footprint by modernizing our fleet, benefiting from newer technologies and eco-vessels with greener characteristics. In Q2 and Q3 today, we took delivery of four vessels, three 5,300 TU container ships, all chattered out for an average of 5.2 years at an average net daily rate of $37,050 per day. one LR2 Aframax vessel, which has been chattered out for five years at $26,366 net per day. Following these deliveries, we have 28 additional new building vessels delivered into our fleet through 2028, representing $1.8 billion of total acquisition price. In container ships, we have eight vessels to be delivered, with a total acquisition price of about $0.7 billion. We have mitigated this risk with long-term credit-worthy charters, generating about $0.8 billion in revenue over a 6.7-year average charter duration. In the tanker space, we have 20 vessels to be delivered for a total price of approximately $1.1 billion. We charter out 16 of these vessels for an average period of five years, generating aggregate contracted revenue of about $0.8 billion. We have also been opportunistically replacing older vessels. In 2024, we have sold seven vessels with an average age of 17.1 years for 157.2 million. At the same time, we exercised the purchase options on five Japanese-built vessels with an average age of eight years for a total price of 142 million. Moving to slide 13, we continue to secure long-term employment for our fleet. In Q2 and Q3 today, we have created about 560 million additional contractor levy. About 305 million comes from our tanker fleet and about 255 million from our container ships. Our total contracted revenue amounts to 3.7 billion. 1.4 billion relates to our tanker fleet, 0.4 billion relates to our dry-bally fleet, and 1.9 billion relates to our container ships. Charters are extending through 2037 with a diverse group of quality counterparts. About 50% of our contracted revenue is expected to be earned in the next two years. I now pass the call to Eri Tsiromi, our CFO, which will take you through the financial highlights. Eri?