Business Context and Reporting Period
Company: Navios Maritime Partners L.P.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Three and six months ended June 30, 2021
Business Overview: Navios Partners is an international owner and operator of dry cargo vessels, including drybulk (Panamax, Capesize, Ultra-Handymax) and containerships. The company generates revenue primarily through long-term time charters. As of August 23, 2021, the fleet consisted of 98 vessels (27 Panamax, 24 Capesize, 4 Ultra-Handymax, 43 Containerships), with additional vessels under bareboat charter-in or newbuilding agreements.
Key Financial Metrics
| Metric ($ in thousands) | 3 Months Ended June 30, 2021 |
6 Months Ended June 30, 2021 |
|---|---|---|
| Time Charter & Voyage Revenues | $152,009 | $217,072 |
| Net Income / (Loss) | $99,913 | $236,592 |
| EBITDA | $90,424 | $248,975 |
| Adjusted EBITDA | $90,424 | $124,083 |
| Operating Surplus | $65,857 | $77,855 |
| Net Cash Provided by Operating Activities | $61,072 | $77,249 |
| Net Cash Used in Investing Activities | ($139,176) | ($133,538) |
| Net Cash Provided by Financing Activities | $259,577 | $258,414 |
| Total Borrowings (Net of deferred costs) | $795,510 (as of June 30, 2021) | |
| Cash and Cash Equivalents | $227,117 (as of June 30, 2021) |
Fleet Performance (6 Months Ended June 30, 2021):
- Time Charter Equivalent (TCE) Combined: $18,276 per day
- Fleet Utilization: 99.1%
- Available Days: 11,494
Material Changes vs. Prior Period
Revenue Growth: Revenues for the six months ended June 30, 2021, increased by 133.3% to $217.1 million compared to $93.0 million in the prior year period. This was driven by a 66.8% increase in TCE rates and a 41.4% increase in available days due to fleet expansion.
Profitability: Net income turned from a loss of $25.4 million in the prior year period to a profit of $236.6 million. This significant swing was primarily due to:
- Acquisition Gains: A $44.1 million bargain purchase gain and an $80.8 million gain from the remeasurement of the previously held interest in Navios Maritime Containers L.P. upon the March 31, 2021 merger.
- Operational Improvement: Higher charter rates and increased fleet size.
- Non-Recurring Items in Prior Year: The 2020 period included a $6.8 million vessel impairment loss and a $6.9 million impairment of receivables from an affiliated company, which were absent in 2021.
Expense Increases: Vessel operating expenses increased by 46.7% to $64.7 million, and depreciation increased by 29% to $35.2 million, reflecting the larger fleet size and the inclusion of the Navios Containers fleet.
Guidance, Outlook, and Recent Developments
Merger with Navios Acquisition: On August 25, 2021, Navios Partners entered into a merger agreement to acquire Navios Maritime Acquisition Corporation. Upon consummation, Navios Acquisition will become a wholly-owned subsidiary. Navios Partners agreed to purchase $150 million of Navios Acquisition stock to fund the redemption of Navios Acquisition's $397.5 million in Ship Mortgage Notes.
Fleet Expansion and Renewal:
- Acquisitions: Agreed to purchase six 5,300 TEU newbuilding containerships ($61.6 million each) for delivery in 2023-2024. Acquired three Capesize vessels from Navios Holdings for $88.0 million in June/July 2021. Entered bareboat charter-in agreements for five newbuilding Capesize vessels.
- Disposals: Sold four vessels in July/August 2021 (Harmony N, Navios Azalea, Navios Dedication, and agreed sale of Navios Altair I) for a combined net price of approximately $88.8 million.
Financing:
- Secured multiple new credit facilities totaling over $300 million to refinance existing debt and fund acquisitions.
- Completed several sale and leaseback transactions totaling $48.5 million for Capesize vessels.
- Issued common units under Continuous Offering Programs, raising approximately $200 million in net proceeds during the first half of 2021.
Distributions: The Board authorized a quarterly cash distribution of $0.05 per unit for the second quarter of 2021, paid on August 12, 2021. Future distributions remain subject to cash requirements and credit agreement restrictions.
Risks: The filing highlights risks related to global economic conditions, the impact of the COVID-19 pandemic, charterer creditworthiness, vessel supply and demand, and the ability to secure financing. Forward-looking statements regarding future cash flow and growth are subject to significant uncertainties.
Key Facts for Investor Verification
- Non-GAAP Adjustments: Verify the impact of the $124.9 million in non-recurring gains (bargain purchase and equity remeasurement) on the reported Net Income of $236.6 million. Adjusted EBITDA ($124.1 million) provides a clearer view of core operating performance.
- Merger Status: Confirm the closing conditions and timeline for the merger with Navios Maritime Acquisition Corporation, including the redemption of the $397.5 million Ship Mortgage Notes.
- Debt Covenants: Review compliance with financial covenants, specifically the EBITDA to interest expense ratio (minimum 2.00:1.00) and minimum net worth ($135 million), as these restrict future distributions.
- Fleet Composition: Note the significant shift in fleet mix due to the Navios Containers acquisition and the ongoing strategy to replace older drybulk vessels with newbuilds.
- Related Party Transactions: Monitor ongoing vessel acquisitions from Navios Holdings and management fees paid to the Manager, which constitute a significant portion of operating expenses.