Navios Maritime Partners L.P. — FY 2017 Form 20-F
Reporting period: Fiscal year ended December 31, 2017. This is an annual report, not a standalone fourth-quarter filing. Figures are in U.S. dollars; financial statement amounts are generally in millions unless noted.
Business context
Navios Maritime Partners owns and operates drybulk and container vessels, primarily under time charters. Its fleet comprised 36 vessels at year-end. Operations and administrative services are provided by Navios ShipManagement, a Navios Holdings subsidiary, under related-party agreements.
Key financial metrics
| Metric | FY 2017 / year-end | FY 2016 / year-end |
|---|---|---|
| Revenue | $211.7 million | $190.5 million |
| Net loss | $14.9 million; loss per unit $0.11 | $52.5 million; loss per unit $0.62 |
| Net cash from operations | $53.9 million | $56.5 million |
| EBITDA (non-GAAP) | $99.3 million | $76.9 million |
| Adjusted EBITDA (non-GAAP, as reconciled in filing) | $133.1 million | $123.5 million |
| Operating surplus (non-GAAP) | $92.6 million | $85.0 million |
| Total assets | $1,305.3 million | $1,268.6 million |
| Debt, net of discount and financing costs | $493.5 million | $523.8 million |
| Cash and cash equivalents | $24.0 million | $17.4 million |
| Restricted cash | $5.9 million | $7.7 million |
| Working capital | $6.1 million positive | Not stated here |
The filing does not provide a clear GAAP operating-margin figure. Weighted-average borrowing cost rose to 5.76% from 4.67%; net interest expense increased to $38.2 million from $31.2 million. Year-end current assets were $60.3 million and current liabilities $54.2 million. Contractual debt principal was $510.6 million before unamortized discounts and finance costs; the filing’s debt tables use differing presentations, so investors should check the audited debt note.
Changes versus the prior comparable period
- Revenue increased 11.1%, driven mainly by seven drybulk vessel acquisitions and the contribution from Navios Containers during its consolidation period. TCE declined to $16,025 per day from $16,364, while available fleet days increased.
- The net loss narrowed by $37.7 million. The comparison reflects lower depreciation and amortization, partly offset by $32.7 million of vessel impairments, higher interest expense and operating costs. FY 2016 also included a $19.4 million loss on HMM securities.
- Operating cash flow declined $2.6 million despite the smaller net loss. Investing cash outflow was $187.2 million, largely reflecting vessel acquisitions and investment activity; financing cash inflow was $140.0 million, supported by debt and unit issuance.
- Debt carrying value declined from $523.8 million to $493.5 million. The company refinanced its Term Loan B and issued a $53.0 million add-on during 2017. Common units outstanding rose from 83.3 million to 147.8 million, materially diluting existing holders.
- Navios Partners lost control of Navios Containers in August 2017 and thereafter accounted for its remaining investment under the equity method.
Outlook, risks and unusual items
- Distributions: Cash distributions were suspended beginning with the quarter ended December 31, 2015; none were paid in 2017. In March 2018, the board announced an intended quarterly distribution of $0.02 per unit, subject to board discretion, available cash, debt covenants and other restrictions. The first announced payment was for Q1 2018.
- Liquidity and debt: Management said its cash forecast indicated sufficient funds for debt service and normal working capital for 12 months from April 4, 2018. This is a management forecast, not a guarantee. The Term Loan B matures September 2020 and includes a large final payment of approximately $384.1 million; debt is floating-rate and unhedged. The partnership reported covenant compliance at year-end.
- Operating conditions: Shipping rates and vessel values are cyclical. Management cited low and volatile charter markets, vessel oversupply, and charter renewal exposure. Average remaining charter duration was approximately two years; HMM and Yang Ming represented 26.8% and 12.0% of 2017 revenue, respectively.
- Asset values: The company recorded $32.7 million in 2017 vessel impairments, including $30.3 million for one vessel and $2.4 million related to the sale of Navios Gemini S. Separately, it estimated that carrying values for 32 vessels exceeded estimated fair values by $291.6 million in aggregate; this estimate is not itself a recorded impairment.
- Related parties and contingencies: Management fees were $67.3 million and G&A was $17.2 million. The Navios Holdings guarantee provides supplemental credit-default coverage up to $20 million, with final settlement due no later than December 31, 2019. Hanjin-related claims remain in bankruptcy proceedings; the company recorded a $1.5 million doubtful-account allowance related to Hanjin.
- Post-year-end financing and fleet actions: In February 2018, the partnership raised about $33.3 million net from a registered direct unit offering of 18.4 million units at $1.90 each. It also agreed to acquire three Panamax vessels for delivery in 2018 and entered a 10-year bareboat charter-in agreement for a vessel expected in 2019.
- Other risks: The filing highlights customer credit risk, restrictive debt covenants, possible vessel-value covenant pressure, higher interest rates, environmental compliance costs—including the 2020 sulfur-fuel requirements—and potential dilution or limited access to capital markets.
Most important facts for investors to verify
- Reconcile gross borrowings, debt carrying value, scheduled amortization and the large September 2020 maturity using the audited debt note and loan agreements.
- Assess covenant headroom, liquidity available for operations, and whether the announced distribution can be sustained without impairing debt service or vessel maintenance.
- Review the impairment assumptions and vessel valuations, particularly given the disclosed $291.6 million aggregate gap between carrying and estimated fair values for 32 vessels.
- Track charter renewals, spot-market exposure and the financial condition of HMM, Yang Ming and other major charterers, as well as recovery of Hanjin-related claims.
- Evaluate dilution from the 2017 and February 2018 unit offerings, further capital needs, and the terms and economics of related-party management and affiliate arrangements.