NMM

Business Context and Reporting Period

Company: Navios Maritime Partners L.P.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: August 8, 2019
Reporting Period: Three and six months ended June 30, 2019 (unaudited).
Business Overview: Navios Partners is an international owner and operator of dry cargo vessels, including Panamax, Capesize, Ultra-Handymax, and Containerships. The fleet is primarily chartered under long-term time charters. As of August 7, 2019, the fleet consisted of 37 vessels (36 owned, 1 chartered-in).

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Revenues decreased 18.0% ($10.5 million) for the three months and 15.0% ($16.7 million) for the six months compared to 2018. This was driven by a reduction in the fleet size due to vessel sales (YM Unity, YM Utmost, Navios Felicity, Navios Libra II, Navios Galaxy I) and a decrease in the TCE rate.
• Net Loss Improvement: Net loss narrowed significantly to $6.5 million for the three months ended June 30, 2019, compared to a $29.5 million loss in the same period of 2018. The 2018 loss included a $37.9 million vessel impairment charge related to the sale of YM Unity and YM Utmost, which did not recur in 2019.
• Impairment Charges: A $7.3 million impairment loss was recorded in the first half of 2019 related to the Navios Galaxy I, which was subsequently sold in April 2019.
• Interest Expense: Interest expense increased 13.5% for the three months and 15.1% for the six months, primarily due to a higher weighted average interest rate and write-offs of deferred finance fees following prepayments on the Term Loan B Facility.

Guidance, Outlook, and Recent Developments

• Cash Distribution: The Board declared a quarterly cash distribution of $0.30 per unit for the second quarter of 2019, payable August 9, 2019. The aggregate amount is approximately $3.4 million.
• Financing Activities:
  • Agreed to a new $140.0 million credit facility (July 2019) to refinance eight drybulk vessels and five containerships.
  • Completed a $22.0 million sale and leaseback transaction for the Capesize vessel Navios Ace (July 2019).
  • Completed a $7.5 million sale and leaseback transaction for the Panamax vessel Navios Sagittarius (June 2019).
  • Repaid $113.2 million to the Term Loan B Facility since January 1, 2019.
• Fleet Developments: Took delivery of the Navios Libra, a 2019-built Kamsarmax vessel, under a 10-year bareboat charter-in agreement (July 2019).
• Stock Repurchase: Authorized a $50.0 million common unit repurchase program in January 2019. As of August 7, 2019, the Company repurchased and cancelled 312,952 units for approximately $4.5 million.
• Risks: Key risks include global trade uncertainty, fluctuations in charter rates, customer creditworthiness (HMM represented ~30% of revenue in H1 2019), and the ability to secure financing on favorable terms.

Investor Verification Checklist

• Customer Concentration: Verify the financial stability of Hyundai Merchant Marine Co., Ltd. (HMM), which accounted for approximately 29.9% of total revenues in the first half of 2019.
• Debt Covenants: Confirm continued compliance with financial covenants, specifically the EBITDA to interest expense ratio (minimum 2.00:1.00) and minimum net worth ($135.0 million).
• Related Party Transactions: Review the $14.4 million claim receivable from the Navios Holdings Guarantee and the repayment schedule agreed in July 2019.
• Charter Expirations: Assess the impact of multiple vessel charters expiring in late 2019 and early 2020 (e.g., Navios Soleil, Navios La Paix, Navios Hyperion, Navios Orbiter, Navios Helios, Navios Sun, Navios Hope, Navios Sagittarius, Navios Harmony, Navios Prosperity I, Navios Libertas, Navios Altair I, Navios Symmetry, Navios Apollon I, Navios Beaufiks, Navios Aurora II, Navios Pollux, Navios Sol, Navios Fulvia, Navios Buena Ventura, Navios Luz, Navios Ace, Navios Joy).
• Reverse Stock Split: Note the 1-for-15 reverse stock split effective May 21, 2019, when comparing unit counts and per-unit data to prior periods.