Navios Maritime Partners L.P. — 2019 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2019. This is an audited annual report, not a standalone fourth-quarter filing; quarterly financial results are not clearly provided in the filing text. Figures below are in U.S. dollars unless noted.
Business context
Navios Maritime Partners owns and operates drybulk and containership vessels, generally chartered under medium- to long-term time charters. At year-end, it operated 46 vessels, including owned and bareboat-chartered-in vessels. Its strategy is to pursue contracted cash flows, expand and diversify its fleet, and increase quarterly distributions over time.
Key financial metrics
| Metric | 2019 | 2018 |
|---|---|---|
| Time charter and voyage revenue | $219.4 million | $231.4 million |
| Net loss | $62.1 million | $13.1 million |
| Loss per common unit | $5.62 | $1.18 |
| Net cash from operating activities | $70.4 million | $68.3 million |
| Adjusted EBITDA (non-GAAP) | $120.0 million | $139.1 million |
| Operating surplus (non-GAAP) | $58.8 million | $77.9 million |
| Cash and cash equivalents | $23.4 million | $58.6 million |
| Restricted cash | $7.0 million | $2.9 million |
| Total assets | $1,253.5 million | $1,314.1 million |
| Total borrowings, gross | $494.4 million | $519.1 million |
The filing does not provide a clear headline operating-margin measure. Current assets were $76.0 million against current liabilities of $79.8 million, a reported negative working-capital position of $3.8 million. Current borrowings, net, were $59.8 million. Credit-facility covenants include liquidity, collateral, leverage, and interest-coverage tests; the company reported compliance, or use of applicable cure/prepayment provisions, at December 31, 2019.
Material changes versus 2018
- Revenue fell 5.2%, mainly as the average time-charter-equivalent rate declined to $15,791 per day from $16,458; available fleet days also decreased.
- Net loss widened by $49.1 million. The largest unusual item was a $42.6 million other-than-temporary impairment of the Navios Containers investment. Vessel impairment losses totaled $36.7 million, including $29.4 million on one vessel and $7.3 million related to the sale of Navios Galaxy I.
- Adjusted EBITDA declined $19.1 million, reflecting lower revenue and higher voyage and general and administrative expenses, partly offset by lower management fees.
- The company acquired five containerships for fair value of about $56.1 million through the liquidation of Navios Europe I and four drybulk vessels for about $40.4 million from an entity affiliated with its CEO. It sold Navios Galaxy I for approximately $6.0 million.
- It fully repaid the Term Loan B facility in October, refinancing through multiple bank facilities and sale-and-leaseback transactions. Gross borrowings declined year over year, while cash and cash equivalents decreased by $35.2 million.
Cash flow, debt, distributions and outlook
- Operating cash flow was $70.4 million. Investing activities used $17.0 million and financing activities used $84.4 million, including $448.2 million of debt and financial-liability repayments, $13.6 million of distributions, and $4.5 million of unit repurchases.
- Year-end gross borrowings comprised $404.3 million of credit-facility debt and $90.1 million of sale-and-leaseback financial liabilities. Contractual obligations totaled $557.3 million, including loan obligations, financial liabilities, and bareboat charter commitments; the contractual-obligations table excludes specified interest payments.
- Substantially all bank debt bears floating rates linked to LIBOR. The company reported a 6.7% weighted-average borrowing rate for 2019 and estimated that a 1 percentage-point LIBOR increase would raise annual interest expense by $4.4 million. It reported no current interest-rate hedges.
- The board declared a $0.30-per-unit distribution for the quarter ended December 31, 2019, payable in February 2020. Distributions remain discretionary and subject to cash availability, debt covenants, and legal restrictions. The company had suspended distributions in 2016 and reinstated them in 2018.
- Management stated that its cash forecast indicated sufficient cash for required debt service and normal working-capital needs through twelve months from March 30, 2020. This is management’s assessment, not a guarantee; the filing provides no quantified earnings or charter-rate guidance.
- Future minimum contractual charter revenue was reported at $515.3 million as of year-end, assuming no off-hire days. The amount depends on charter performance and does not ensure collection or renewal at comparable rates.
Risks, contingencies and unusual items
- Charter revenue is concentrated: Hyundai Merchant Marine represented 25.9% of 2019 revenue, Swissmarine 12.3%, and Cargill 10.9%. Charter expirations and weak replacement rates could pressure earnings and cash availability.
- The filing identifies COVID-19, trade restrictions, economic weakness, vessel oversupply, volatile charter rates, fuel and environmental compliance costs, and vessel-value declines as risks. COVID-19 impacts were uncertain as of the report date.
- Thirty-four vessels had estimated fair values below their carrying values by approximately $225.3 million in aggregate; this estimate was not itself an impairment charge. The company’s impairment testing depends on projected charter rates, utilization, vessel lives, and other assumptions.
- Related-party matters merit attention: the Manager is an affiliate, management and administrative fees are substantial, and the company acquired drybulk vessels from an entity affiliated with its CEO. The four-vessel purchase was approved by the Conflicts Committee.
- A $10.0 million receivable under the Navios Holdings Guarantee was due in two $5.0 million installments in 2020 and 2021. The company recorded a $3.6 million expense in 2019 from a change in its estimate of this claim receivable.
- Claims against Hanjin Shipping for lost charter revenue remained under court assessment. Management stated that other ordinary-course disputes were not expected to be material.
- IMO sulfur-emission limits took effect in January 2020; compliance spending and fuel-price differentials may affect costs and vessel competitiveness. The company also disclosed that most extended off-hire and strike losses are uninsured.
Most important facts for investors to verify
- Whether operating cash flow and available liquidity can support near-term debt service, covenant requirements, vessel maintenance, and distributions.
- The status and refinancing or repayment of near-term debt maturities, particularly the large balloon components, and the final documentation for the proposed $25.5 million sale-and-leaseback refinancing.
- Actual charter coverage, customer credit quality, and rechartering rates as vessels come off hire, especially given customer concentration and the COVID-19 disruption risk.
- Whether the $42.6 million affiliate-investment impairment and the vessel impairment assumptions adequately reflect current market values and expected cash flows.
- Collection of the Navios Holdings Guarantee receivable and any further changes in its recoverability estimate.
- Related-party fees, acquisition terms, and the governance process for transactions involving the Manager, CEO affiliates, or other Navios entities.
- Whether the $0.30 quarterly distribution can be sustained without borrowing or compromising liquidity and covenant headroom.