Navios Maritime Holdings Inc. Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2014
Navios Maritime Holdings Inc., a global, vertically integrated seaborne shipping and logistics company, yesterday reported financial results for the second quarter and six months ended June 30, 2014
Angeliki Frangou, Chairman and Chief Executive Officer, stated, “We are pleased with our results for the second quarter of 2014, for which we reported revenue of $145.4 million, a 16\% increase and Adjusted EBITDA of $51.4 million, a 33\% increase compared to the same period last year. We are also pleased to again announce a dividend of 6 cents for Q2 2014 representing a yield of 2.6\%.”
Angeliki Frangou continued, “We have created a significant competitive advantage through our in house technical and commercial management. These skills reduce our daily opex 34\% below the industry average and control G&A expense so that they are below our public peers. These skills harness scale and create operating leverage by reducing costs in a way that would not be possible, in our view, with a third party provider.”
HIGHLIGHTS — RECENT DEVELOPMENTS
Navios Holdings
Issuances of American Depositary Shares Representing Preferred Stock
On July 8, 2014, Navios Holdings completed the sale of 4,800,000 American Depositary Shares, including 600,000 American Depositary Shares sold as part of the exercise of an overallotment option granted to the underwriters, each of which represents 1/100th of a share of the Company’s Series H Cumulative Redeemable Perpetual Preferred Stock (the “Series H”), with a liquidation preference of $2,500.00 per share, priced at $25.00 per American Depositary Share. Dividends will be payable at a rate of 8.625\% per annum of the stated liquidation preference. The American Depositary Shares are listed on the New York Stock Exchange under the symbol “NMPrH”. The net proceeds of approximately $115.8 million from the offering (after deducting underwriting discounts and estimated offering expenses) will be used for general corporate purposes, including acquisition of vessels.
Navios Holdings has raised in 2014 YTD total gross proceeds of $170.0 million Preferred Stock including $50.0 million raised in January 2014.
Fleet Update
On June 4, 2014, Navios Holdings took delivery of the Navios Gem, a 2014-Japanese built 181,336 dwt Capesize vessel for a purchase price of $54.2 million, of which $24.2 million was paid in cash and $30.0 million was financed through a new loan with DVB Bank, Credit Agricole Corporate and Investment Bank and Norddeutsche Landesbank. The loan bears interest at a rate of LIBOR plus 275 basis points and is repayable in 24 quarterly installments of $0.5 million, with a final balloon payment of $18.8 million on the last repayment date.
Following the delivery of Navios Gem, Navios Holdings controls a fleet of 63 vessels totaling 6.2 million dwt, of which 39 are owned and 24 are chartered-in under long-term charters (collectively, the “Core Fleet”). Navios Holdings currently operates 54 vessels (16 Capesize, 17 Panamax, 19 Ultra Handymax and two Handysize) totaling 5.3 million dwt. The current average age of the operating fleet is 7.3 years. Additionally, Navios Holdings has (i) seven newbuilding charter-in vessels expected to be delivered at various dates through 2016; and (ii) two newbuilding owned vessels which are expected to be delivered in the fourth quarter of 2015.
Exhibit II provides certain details of the “Core Fleet” of Navios Holdings. It does not include the fleet of Navios Logistics.
Navios South American Logistics Inc. (“Navios Logistics”)
Reaching the highest quarterly Adjusted EBITDA since its incorporation, Navios Logistics reported for the three months ended June 30, 2014, revenue of $70.0 million increased by 10.2\% and Adjusted EBITDA of $21.4 million increased by 21.9\%.
In the second quarter of 2014, Navios Logistics took delivery of 36 newbuilding barges in China and positioned them in South America. These barges, along with three second-hand pushboats that were acquired in January 2014, have been placed to service three six-year time charter contracts at $14,500, net per day each, with an investment grade counterparty. Navios Logistics estimates that it will generate approximately $10.0 million annual EBITDA from the three contracts. EBITDA estimates assume expenses approximating current operating costs and 360 revenue days per year per convoy.
In July 2014, Navios Logistics took delivery of additional 36 newbuilding barges in China, which are currently being transported to South America.
In August 2014, Navios Logistics completed dredging works in its port facility in Nueva Palmira, Uruguay, as part of the expansion of its port terminal infrastructure to serve a 20-year storage and transshipment agreement with Vale International S.A.
Dividend Policy
On August 14, 2014, the Board of Directors declared a quarterly cash dividend for the second quarter of 2014 of $0.06 per share of common stock. The dividend is payable on September 26, 2014 to stockholders of record as of September 18, 2014. The declaration and payment of any further dividends remain subject to the discretion of the Board and will depend on, among other things, Navios Holdings’ cash requirements after taking into account market opportunities, restrictions under its credit agreements and other debt obligations and such other factors as the Board may deem advisable.
Navios Maritime Partners L.P. (“Navios Partners”)
In August 2014, Navios Holdings received $7.5 million from Navios Partners representing the cash distribution for the second quarter of 2014.
Navios Maritime Acquisition Corporation (“Navios Acquisition”)
In July 2014, Navios Holdings received $3.6 million from Navios Acquisition representing the cash dividend for the first quarter of 2014.
Time Charter Coverage
As of August 18, 2014, Navios Holdings has chartered-out 74.6\% (85.5\% including index-linked charters) and 4.5\% (15.4\% including index-linked charters) of available days for 2014 and 2015, respectively, expected to generate $162.1 million and $16.0 million in revenue, respectively. The average daily charter-out rate for the core fleet is $12,621 and $20,966 for 2014 and 2015, respectively. The average daily charter-in rate for the active long-term charter-in vessels for 2014 is $13,400.
The above figures do not include the fleet of Navios Logistics and vessels servicing Contracts of Affreightment.
Earnings Highlights
As of June 30, 2014:
Net Debt to Total Capitalization of 51.5\% (45.3\% after the issuance of the Series H in July 2014).
Cash of $235.1 million ($350.9 million including net proceeds from issuance of the Series H in July 2014).
Second Quarter 2014 and 2013 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):
The second quarter 2014 and 2013 information presented below was derived from the unaudited condensed consolidated financial statements for the respective periods. Adjusted EBITDA, Adjusted Net Loss and Adjusted Basic Losses per Share are non-U.S. GAAP financial measures and should not be used in isolation or as substitution for Navios Holdings’ results.
Revenue from dry bulk vessel operations for the three months ended June 30, 2014 was $75.4 million as compared to $62.1 million for the same period during 2013. The increase in dry bulk revenue was mainly attributable to (i) an increase in the time charter equivalent rate (“TCE”) per day by 12.5\% to $11,923 per day in the second quarter of 2014, as compared to $10,600 per day in the same period of 2013; (ii) an increase in available days for owned vessels by 556 days; and (iii) an increase in charter-in fleet available days by 253 days.
Revenue from the logistics business was $70.0 million for the three months ended June 30, 2014 as compared to $63.5 million for the same period of 2013. This increase was mainly attributable to (i) the increase in products transported in the dry port terminal; (ii) commencement of operations of three new dry cargo convoys in the barge business; and (iii) the increase in the cabotage fleet’s operating days and higher time charter rates achieved.
Adjusted EBITDA of Navios Holdings for the three months ended June 30, 2014 increased by $12.6 million to $51.4 million as compared to $38.8 million for the same period of 2013. The $12.6 million increase in Adjusted EBITDA was primarily due to (i) a $19.8 million increase in revenue; (ii) a $2.1 million decrease in time charter, voyage and logistics business expenses; (iii) a $3.0 million increase in equity in net earnings from affiliated companies; and (iv) a $0.6 million decrease in general and administrative expenses (excluding share-based compensation expenses). This overall increase of $25.5 million was mitigated by (i) a $5.7 million decrease in other income, net (excluding the non-cash loss on available-for-sale securities); (ii) a $6.7 million increase in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); and (iii) a $0.5 million increase in net income attributable to the noncontrolling interest (excluding the portion of loss on Navios Logistics’ bond extinguishment).
Adjusted EBITDA of Navios Logistics was $21.4 million (adjusted for $27.3 million loss on bond extinguishment) for the three month period ended June 30, 2014 as compared to $17.6 million for the same period in 2013.
Adjusted Net Loss of Navios Holdings for the three months ended June 30, 2014 was $7.7 million as compared to a $15.9 million loss for the same period of 2013. The $8.2 million decrease in Adjusted Net Loss was mainly due to an increase in Adjusted EBITDA of $12.6 million. This increase was partially offset by (i) an increase in interest expense and finance cost, net of $1.1 million; (ii) an increase in depreciation and amortization of $1.6 million; (iii) an increase in income tax expense of $0.7 million; (iv) an increase of $0.3 million in share-based compensation expense; and (v) an increase of $0.7 million in amortization for deferred drydock and special survey costs.
First Half of 2014 and 2013 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):
The information for the six month period ended June 30, 2014 and 2013 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods. Adjusted EBITDA, Adjusted Net Loss and Adjusted Basic Losses per Share are non-U.S. GAAP financial measures, and should not be used in isolation or as substitution for Navios Holdings’ results.
Revenue from dry bulk vessel operations for the six months ended June 30, 2014 was $152.0 million as compared to $122.7 million for the same period during 2013. The increase in dry bulk revenue was mainly attributable to (i) an increase in TCE per day by 10.5\% to $12,389 per day in the first half of 2014, as compared to $11,211 per day in the same period of 2013; (ii) an increase in available days for owned vessels by 1,090 days; and (iii) an increase in charter-in fleet available days by 574 days.
Revenue from the logistics business was $115.6 million for the six months ended June 30, 2014 as compared to $136.7 million for the same period of 2013. This decrease was mainly attributable to the decrease in the Paraguayan liquid port’s volume of products sold, partially mitigated by (i) an increase in products transported in the dry port terminal; (ii) commencement of operations of three new dry cargo convoys in the barge business; and (iii) higher time charter rates achieved in the cabotage business.
Adjusted EBITDA of Navios Holdings for the six month period ended June 30, 2014 increased by $33.9 million to $111.2 million as compared to $77.3 million for the same period of 2013. The $33.9 million increase in Adjusted EBITDA was primarily due to (i) a $8.2 million increase in revenue; (ii) a $20.9 million decrease in time charter, voyage and logistics business expenses; (iii) a $11.3 million increase in equity in net earnings from affiliated companies; and (iv) a $1.5 million decrease in net income attributable to the noncontrolling interest (excluding the portion of loss on Navios Logistics’ bond extinguishment). This overall increase of $41.9 million was partially mitigated by (i) a $0.3 million decrease in other income, net (excluding the non-cash loss on available-for-sale securities); (ii) a $6.5 million increase in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); and (iii) a $1.2 million increase in general and administrative expenses (excluding share-based compensation expenses).
Adjusted EBITDA of Navios Logistics was $35.4 million (adjusted for $27.3 million loss on bond extinguishment) for the six month period ended June 30, 2014 as compared to $31.7 million for the same period in 2013.
Adjusted Net Loss of Navios Holdings for the six months ended June 30, 2014 was $5.7 million as compared to $26.0 million for the same period of 2013. The $20.3 million decrease in Adjusted Net Loss was mainly due to an increase in Adjusted EBITDA of $33.9 million. This increase was partially offset by (i) an increase in interest expense and finance cost, net of $3.9 million; (ii) an increase in depreciation and amortization of $2.9 million; (iii) an increase in income tax expense of $4.7 million; (iv) an increase of $0.6 million in share-based compensation expense; and (v) an increase of $1.5 million in amortization for deferred drydock and special survey costs.
