Navios Maritime reports financial results for Q3 and 9M 2018
Navios Maritime Holdings Inc. ("Navios Holdings" or "the Company") (NYSE: NM), a global, vertically integrated seaborne shipping and logistics company, reported financial results for the third quarter and nine months ended September 30, 2018.
Angeliki Frangou, Chairman and Chief Executive Officer, stated, “I am pleased with the results of the third quarter of 2018, for which we reported revenue of $141.5 million and Adjusted EBITDA of $62.8 million. We continue to see the positive effects of healthier charter markets on our business. Rates for dry bulk vessels improved materially, with the TCE rate of our fleet for the third quarter of 2018 about 50% higher than the third quarter of 2017. This increased our adjusted EBITDA from core shipping operations by almost 250% in the third quarter of 2018 compared to the third quarter of 2017.”
Angeliki Frangou continued, “We have leveraged the increase in market rates through our chartering initiative that has 26 vessels chartered out on index linked agreements with an average charter rate equal to 110% of the respective index. The charters provide Navios multiple options for fixing the charter rate for all or a portion of the remaining charter period.”
HIGHLIGHTS – RECENT DEVELOPMENTS
Bond Repurchase
In September 2018, Navios Holdings repurchased a total of $35.7 million in par value of its 7.375% First Priority Ship Mortgage Notes due 2022.
Fleet Update
Renewal and Expansion
In November 2018, Navios Primavera, a 2007-built, 53,464 dwt vessel, was delivered to the owned fleet. Navios Holdings in August 2018, exercised the option to acquire the above chartered-in vessel, for a purchase price of $10.5 million.
Sale of vessels
In November 2018, Navios Holdings agreed to sell to an unrelated third party the Navios Magellan, a 2000-built Panamax vessel of 74,333 dwt, for a total net sale price of $7.0 million, to be paid in cash.
Following fleet activities during the period 2017-2018YTD, the average age of Navios Holdings’ fleet has decreased by 17%, basis fully delivered fleet, and the capacity of the fleet has increased by 8%.
Capturing market recovery
Navios Holdings controls a fleet of 70 vessels totaling 7.1 million dwt, of which 36 are owned and 34 are chartered-in under long-term charters (collectively, the "Core Fleet"). The fleet consists of 20 Capesize, 32 Panamax, 16 Ultra-Handymax and two Handysize vessels, with an average age of 8.0 years, basis fully delivered fleet.
Navios Holdings 5,457 available days for the remaining three months of 2018 and 20,428 total available days for 2019 (excluding the fleet of Navios Logistics and vessels servicing contracts of affreightment).
The average TCE rate we achieved for the third quarter of 2018 was $14,210 per day, approximately 50% higher than the same quarter of last year. For the nine month period ended September 30, 2018, we achieved a TCE of $12,368 per day, approximately 40% higher than the same period in 2017.
As of November 7, 2018, Navios Holdings has chartered-out 93.7% of available days for the remaining three months of 2018, out of which 64.0% on fixed rate and 29.7% on index or profit sharing, and 42.8% of available days for 2019, out of which 8.3% on fixed rate and 34.5% on index or profit sharing. The above figures do not include the fleet of Navios Logistics and vessels servicing contracts of affreightment.
Exhibit II provides certain details of the Core Fleet of Navios Holdings. It does not include the fleet of Navios Logistics.
Earnings Highlights
EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted Basic Loss per Share are non-U.S. GAAP financial measures and should not be used in isolation or as substitution for Navios Holdings’ results calculated in accordance with U.S. GAAP.
See Exhibit I under the heading, “Disclosure of Non-GAAP Financial Measures,” for a discussion of EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted Basic Loss per Share of Navios Holdings (including Navios Logistics), and EBITDA of Navios Logistics (on a stand-alone basis), and a reconciliation of such measures to the most comparable measures calculated under U.S. GAAP.
The third quarter 2018 and 2017 information presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.
Revenue from dry bulk vessel operations for the three months ended September 30, 2018 was $85.6 million, as compared to $61.0 million for the same period during 2017. The increase in dry bulk revenue was mainly attributable to the increase in the time charter equivalent (“TCE”) per day by 49.9% to $14,210 per day in the third quarter of 2018, as compared to $9,481 per day in the same period of 2017.
Revenue from the logistics business was $55.9 million for the three months ended September 30, 2018, as compared to $59.6 million for the same period in 2017. The decrease was mainly attributable to (i) a $3.7 million decrease in revenue from the cabotage business mainly due to fewer operating days; (ii) a $2.8 million decrease in sales of products mainly due to a decrease in the Paraguayan liquid port's volumes of products sold; and (iii) a $1.9 million decrease in revenue from the barge business mainly related to liquid cargo transportation. The overall decrease was partially mitigated by (i) a $4.7 million increase in revenue from the port terminal business mainly due to the commencement of operations at the new iron ore terminal.
Net Loss of Navios Holdings was $1.8 million for the three months ended September 30, 2018, as compared to $28.3 million for the same period in 2017. Net Loss was affected by items described in the table above. Excluding these items, Adjusted Net Income of Navios Holdings for the three months ended September 30, 2018 was $0.9 million, as compared to $28.3 million Adjusted Net Loss for the same period in 2017. The $29.2 million increase in Adjusted Net Income was mainly due to (i) a $31.6 million increase in Adjusted EBITDA; (ii) a $1.6 million decrease in depreciation and amortization; and (iii) a $0.3 million increase in income tax benefit. This overall increase of $33.5 million was partially mitigated by (i) a $3.9 million increase in interest expense and finance cost, net; (ii) a $0.3 million increase in amortization for deferred drydock and special survey costs; and (iii) a $0.1 million increase in share-based compensation expense.
Net Income of Navios Logistics was $6.7 million for the three month period ended September 30, 2018, as compared to $1.8 million for the same period in 2017.
Adjusted EBITDA of Navios Holdings for the three months ended September 30, 2018 increased by $31.6 million to $62.8 million, as compared to $31.2 million for the same period in 2017. The increase in Adjusted EBITDA was primarily due to (i) a $20.9 million increase in revenue; (ii) a $6.8 million decrease in time charter, voyage and logistics business expenses; (iii) a $6.5 million increase in gain on bond extinguishment; (iv) a $3.9 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); and (v) a $0.3 million decrease in general and administrative expenses (excluding share-based compensation expenses). This overall increase of $38.4 million was partially mitigated by (i) a $5.1 million decrease in equity in net earnings from affiliated companies; and (ii) a $1.7 million increase in net income attributable to noncontrolling interest.
EBITDA of Navios Logistics was $25.5 million for the three month period ended September 30, 2018, as compared to $18.2 million for the same period in 2017.
Nine Months Ended September 30, 2018 and 2017 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):
The information for the nine month period ended September 30, 2018 and 2017 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.
Revenue from dry bulk vessel operations for the nine months ended September 30, 2018 was $222.1 million, as compared to $171.8 million for the same period in 2017. The increase in dry bulk revenue was mainly attributable to the increase in TCE per day by 40.0% to $12,368 per day in the nine month period ended September 30, 2018, as compared to $8,836 per day in the same period in 2017.
Revenue from the logistics business was $168.3 million for the nine months ended September 30, 2018, as compared to $162.8 million for the same period in 2017. The increase was mainly attributable to a $21.7 million increase in revenue from the port terminal business mainly due to the commencement of operations at the new iron ore terminal. The overall increase was partially mitigated by (i) a $7.9 million decrease in revenue from the barge business mainly related to liquid cargo transportation; (ii) a $6.4 million decrease in revenue from the cabotage business mainly due to fewer operating days and lower rates; and (iii) a $1.9 million decrease in sales of products mainly due to a decrease in the Paraguayan liquid port's volumes of products sold.
Net Loss of Navios Holdings was $68.0 million for the nine months ended September 30, 2018, as compared to $114.3 million for the same period in 2017. Net Loss was affected by items described in the table above. Excluding these items, Adjusted Net Loss of Navios Holdings for the nine months ended September 30, 2018 was $51.9 million, as compared to $95.4 million for the same period in 2017. The $43.5 million decrease in Adjusted Net Loss was mainly due to (i) a $54.0 million increase in Adjusted EBITDA; (ii) a $2.7 million decrease in depreciation and amortization; (iii) a $0.7 million increase in income tax benefit; and (iv) a $0.4 million decrease in amortization for deferred drydock and special survey costs. This overall decrease was partially offset by (i) a $14.0 million increase in interest expense and finance cost, net; and (ii) a $0.3 million increase in share-based compensation expense.
Net Income of Navios Logistics was $9.7 million for the nine month period ended September 30, 2018, as compared to $3.3 million for the same period in 2017.
Adjusted EBITDA of Navios Holdings for the nine months ended September 30, 2018 increased by $54.0 million to $134.1 million, as compared to $80.1 million for the same period in 2017. The $54.0 million increase in Adjusted EBITDA was primarily due to (i) a $55.9 million increase in revenue; (ii) a $16.5 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $6.2 million decrease in time charter, voyage and logistics business expenses; and (iv) a $4.8 million increase in gain on bond and debt extinguishment. This overall increase was partially mitigated by (i) a $20.6 million decrease in equity in net earnings from affiliated companies; (ii) a $3.1 million increase in other expense, net; (iii) a $2.3 million increase in general and administrative expenses (excluding share-based compensation expenses); (iv) a $2.3 million increase in net income attributable to the noncontrolling interest; and (v) a $1.1 million decrease in gain on sale of assets.
EBITDA of Navios Logistics was $64.8 million for the nine month period ended September 30, 2018, as compared to $47.5 million for the same period in 2017.
The following table reflects certain key indicators indicative of the performance of Navios Holdings' dry bulk operations (excluding the Navios Logistics fleet) and its fleet performance for the three and nine month periods ended September 30, 2018 and 2017, respectively.
About Navios Maritime Holdings Inc.
Navios Maritime Holdings Inc. (NYSE: NM) is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coal and grain.
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