Navios Maritime Partners L.P. — FY 2018 Form 20-F
Reporting period: Fiscal year ended December 31, 2018; filed April 9, 2019. This is an annual report, not a standalone fourth-quarter earnings filing. Financial amounts below are in U.S. dollars unless noted.
Business context
The partnership owns and operates dry-cargo vessels, including containerships, generally under medium- and long-term charters. Its fleet and operations depend on shipping markets and are managed by an affiliate of Navios Holdings.
Key financial metrics
| Metric | 2018 | 2017 | Change or context |
|---|---|---|---|
| Time charter and voyage revenues | $231.4 million | $211.7 million | Up 9.3% on reported consolidated figures |
| Net loss | $13.1 million | $14.9 million | Loss narrowed; loss per unit was $0.08 versus $0.11 |
| Net cash from operating activities | $68.3 million | $53.5 million | Up $14.8 million |
| Adjusted EBITDA | $139.1 million | $133.1 million | Non-GAAP measure |
| Operating surplus | $77.9 million | $92.6 million | Down $14.8 million; non-GAAP measure |
| Cash and restricted cash | $61.5 million | $29.9 million | Cash and cash equivalents alone were $58.6 million |
| Current assets / current liabilities | $111.1 million / $52.3 million | $60.3 million / $54.2 million | Year-end working capital was $58.8 million |
| Borrowings | $519.1 million gross | $510.6 million gross | Net carrying amount was $507.5 million, including sale-leaseback liabilities |
| Interest expense and finance cost, net | $42.8 million | $38.2 million | Weighted average borrowing rate rose to 6.85% from 5.76% |
Reported revenue comparability requires care: management also compares 2018 revenue of $231.4 million with $199.3 million for 2017 excluding Navios Containers’ partial-period contribution, describing a 16.1% increase. Average time-charter equivalent rate rose to $16,458 per day from $16,025. Investing cash outflow was $67.9 million, versus $187.2 million in 2017; 2018 vessel acquisitions were partly offset by vessel-sale proceeds. Capital expenditures were $118.8 million, primarily fleet expansion, and the estimated maintenance and replacement reserve was $26.8 million.
Material changes and unusual items
- Revenue growth reflected fleet additions and improved freight markets, partly offset by vessel disposals. Management fees rose to $68.9 million, mainly with the larger fleet; interest costs increased amid higher rates.
- The partnership recorded $44.3 million of vessel impairment losses, principally on the YM Unity and YM Utmost, Navios Felicity, and Navios Libra II in connection with their sales. Separately, year-end analysis found carrying value exceeded estimated fair value by about $168.9 million across 22 vessels, though management concluded held-and-used vessels did not require additional impairment.
- Common-unit count increased to 169.1 million from 147.8 million, including an 18.4 million-unit public offering in February 2018 that raised about $33.4 million net.
- Navios Partners distributed Navios Containers units valued at $4.2 million and ended 2018 with a 33.5% interest in that affiliate. The investment’s quoted fair value was $32.8 million versus a $65.1 million carrying value; management assessed the decline as temporary and recorded no impairment of the retained investment.
Outlook, risks, and contingencies
- Management said its cash forecast indicated sufficient funds for debt service and normal working capital needs for 12 months from April 8, 2019, and reported covenant compliance at year-end. These are management expectations, not guarantees.
- Drybulk charters were scheduled to expire from 2019 through 2022; the five owned containerships were on long-term charters extending to 2023, subject to termination options. Rechartering rates, vessel supply, and customer performance remain important uncertainties.
- HMM accounted for approximately 24.5% of 2018 revenue. The filing describes customer concentration, cyclical freight rates, vessel-value and impairment risk, and possible loss of charter income as material exposures.
- Debt is principally floating-rate and unhedged; a 1 percentage-point LIBOR increase was estimated to raise annual interest expense by $5.2 million. The Term Loan B Facility had a large final payment and matured September 2020.
- The board reinstated quarterly distributions in 2018 at $0.02 per unit, subject to board discretion, available cash, and debt restrictions. The Q4 2018 distribution was authorized in January 2019 and paid in February. NYSE notified the partnership in March 2019 that its unit price was below the $1 continued-listing threshold; it had a six-month cure period.
- Management cited upcoming emissions and ballast-water requirements, including the IMO 0.5% sulfur-fuel limit from January 2020, as potential sources of compliance costs. The filing also describes litigation and sanctions risks; Hanjin-related lost-revenue claims remained under court assessment.
Most important facts for investors to verify
- Reconcile reported revenue growth with the filing’s alternative comparison that excludes Navios Containers’ 2017 partial-period results.
- Review the debt maturity schedule, refinancing arrangements, covenant headroom, and exposure to LIBOR and vessel collateral values.
- Assess whether operating cash generation can support maintenance spending, distributions, and any unit repurchases; distributions remain discretionary and debt-restricted.
- Examine the vessel impairment assumptions and actual outcomes from recent disposals, especially given the disclosed fair-value shortfall across 22 vessels.
- Monitor HMM’s credit and charter performance, upcoming drybulk charter expirations, and progress toward curing the NYSE minimum-price deficiency.