Business Context and Reporting Period
Company: Navios Maritime Partners L.P.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Three months ended March 31, 2013
Filing Date: April 29, 2013
Navios Maritime Partners L.P. is an international owner and operator of dry cargo vessels, primarily operating under long-term time charters. As of March 31, 2013, the fleet consisted of 21 vessels (14 Panamax, 8 Capesize, and 3 Ultra-Handymax), with a fleet utilization rate of 99.81%.
Key Financial Metrics
| Metric ($ in thousands) | Q1 2013 | Q1 2012 |
|---|---|---|
| Time Charter Revenues | $50,281 | $47,987 |
| Net Income | $16,246 | $16,937 |
| EBITDA (Non-GAAP) | $37,054 | $36,785 |
| Operating Surplus (Non-GAAP) | $31,215 | $29,590 |
| Net Cash from Operating Activities | $29,393 | $37,788 |
| Total Debt (Outstanding) | $243,785 | $291,100 |
| Cash and Cash Equivalents | $73,892 | $32,132 |
| Time Charter Equivalent (TCE) per Day | $26,244 | $29,978 |
Material Changes vs. Prior Period
- Revenue Growth: Time charter revenues increased by 4.8% ($2.3 million) to $50.3 million, driven by the addition of three vessels acquired in 2012 (Navios Buena Ventura, Navios Soleil, and Navios Helios), which increased available fleet days from 1,576 to 1,890.
- Rate Decline: Despite revenue growth, the Time Charter Equivalent (TCE) rate decreased to $26,244 per day from $29,978 per day in the prior year.
- Expense Increases: Management fees rose 18.1% to $8.5 million and General & Administrative expenses rose 23.1% to $1.6 million, primarily due to the expanded fleet size.
- Debt Reduction: Total borrowings decreased to $243.8 million from $291.1 million. In March 2013, the company prepaid $50.0 million on its credit facility.
- Cash Flow: Net cash provided by operating activities decreased by $8.4 million to $29.4 million, largely due to a decrease in deferred voyage revenue and changes in working capital.
Guidance, Outlook, and Recent Developments
- Capital Raise: In February 2013, the company completed a public offering of 5.175 million common units, raising net proceeds of approximately $70.0 million to fund fleet expansion.
- Fleet Expansion: In April 2013, Navios Partners agreed to acquire four Japanese-built vessels for $108.0 million (one newbuild Capesize, two Panamax, and one newbuild Ultra-Handymax). Deliveries are expected in Q4 2013 and Q1 2014. Financing is expected to be 50% bank debt.
- Distributions: The Board authorized a quarterly cash distribution of $0.4425 per unit for Q1 2013, payable May 14, 2013. The aggregate amount is anticipated to be $29.9 million.
- Outlook: Management expects cash flows from operations to meet short-term liquidity needs for at least the next 12 months. Long-term expansion will rely on external financing.
- Risks: Key risks include fluctuations in charter rates, demand for dry bulk vessels, and credit risk associated with counterparties. The company maintains counterparty insurance up to $120.0 million and supplemental insurance from Navios Holdings up to $20.0 million.
Investor Verification Checklist
- Debt Covenants: Verify continued compliance with financial covenants (Net Worth, debt coverage ratios) given the recent debt prepayment and new acquisition commitments.
- Acquisition Financing: Confirm the terms and interest rates of the 50% bank debt financing for the $108 million vessel acquisition announced in April 2013.
- Counterparty Concentration: Monitor the top four charterers (Cosco, Mitsui O.S.K., Samsun Logix, Hanjin), which collectively accounted for approximately 60.6% of Q1 2013 revenues.
- Scrap Value Assumptions: Note the change in accounting estimate for vessel scrap value from $285 to $340 per lightweight ton (LWT) effective January 1, 2013, and its impact on future depreciation.
- Related Party Transactions: Review the $21.7 million balance due to related parties (Navios Holdings), primarily consisting of outstanding management fees.