NMM

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, 2008
Date Filed: April 22, 2008

Navios Maritime Partners L.P. is an international owner and operator of drybulk carriers, formed in August 2007. The company operates a fleet of Panamax and Capesize vessels chartered under long-term time charters to major counterparties including Cargill, Mitsui O.S.K. Lines, and Rio Tinto. The company does not present comparative information for periods prior to its November 2007 IPO due to structural changes in the business.

Key Financial Metrics

Material Changes and Recent Developments

• Fleet Expansion:
  • Navios Aldebaran: Delivered in March 2008. A newbuilding Panamax vessel (76,500 dwt) chartered-in with a purchase option in 2013. Chartered out for five years at $28,391 per day.
  • Fantastiks: Anticipated ownership transfer in April 2008. A 2005-built Capesize vessel (180,265 dwt) purchased for $34.2 million. Estimated market value is $150.0 million.
  • Navios Aurora: Agreed to acquire from Navios Holdings for $80.0 million, scheduled for delivery July 1, 2008. Financing includes a $35.0 million debt drawdown and issuance of common units for the balance.
  • Navios TBN I: Agreed to acquire a newbuilding Capesize vessel upon delivery in June 2009 for $130.0 million.
• Financial Performance: Revenue increased to $14.32 million compared to $10.52 million in the same period of 2007. Net income decreased to $3.85 million from $4.66 million in Q1 2007, primarily due to increased interest expense ($2.47 million vs $1.28 million) and depreciation ($2.76 million vs $1.99 million) associated with the expanded fleet and debt levels post-IPO.
• Cash Flow: Net cash provided by operating activities was $3.50 million. Net cash used in financing activities was $3.24 million, primarily due to the quarterly cash distribution paid in February 2008.

Guidance, Outlook, and Risks

• Cash Distribution: The Board authorized a quarterly cash distribution of $0.35 per unit for the period ended March 31, 2008, payable May 14, 2008. The aggregate distribution amount is $6.47 million. The company targets a minimum quarterly distribution of $0.35 per unit.
• Debt and Liquidity: The company maintains a $260 million revolving credit facility with $165 million drawn as of March 31, 2008. The facility matures in 2017. The company is in compliance with all financial covenants. Interest rates are LIBOR plus a margin of 80-125 basis points.
• Risks:
  • Market Risk: Exposure to changes in demand for drybulk vessels and competitive market factors.
  • Interest Rate Risk: Borrowings are based on LIBOR; a 1% increase would increase interest expense by approximately $0.4 million for the quarter.
  • Concentration Risk: Five major customers accounted for approximately 89% of total revenues in Q1 2008.
  • Regulatory/Accounting: The company is evaluating the impact of new FASB guidance (Issue 07-4) on earnings-per-unit calculations for Master Limited Partnerships.

Investor Verification Checklist

• Verify the closing of the Fantastiks acquisition and the associated $34.2 million payment.
• Confirm the delivery and financing terms for the Navios Aurora ($80 million purchase price) in July 2008.
• Monitor compliance with the revolving credit facility covenants, specifically debt coverage ratios and tangible net worth, given the planned additional borrowings.
• Review the impact of LIBOR fluctuations on future interest expenses, as the company has significant variable-rate debt.
• Assess the sustainability of the $0.35 per unit quarterly distribution relative to Operating Surplus and maintenance capital expenditure reserves.