Navios Maritime Holdings Inc (NM) 2021 Q4 法說會逐字稿

Good morning, and thank you for joining Navios Maritime Holdings Fourth Quarter 2021 Earnings Conference Call. We are pleased to host this call from the Cayman Islands.

With us today from the company are Chairwoman and CEO; Ms. Angeliki Frangou; Vice Chairman, Mr. Ted Petrone; Chief Financial Officer, Mr. George Achniotis; and Senior Vice President of Strategic Planning, Mr. Ioannis Karyotis.

I will now turn the call over to Ms. Daniela Guerrero, who will take you through the conference call details and the safe harbor statements. Daniela?

Thank you. As a reminder, this conference call is being webcast. To access the webcast, please visit the Investors section of Navios Maritime Holdings website at www.navios.com. You'll see the webcast link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there.

Now I will review the safe harbor statement. This conference call could contain forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Maritime Holdings. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Maritime Holdings management and are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements.

Such risks are more fully discussed in Navios Maritime Holdings' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Maritime Holdings does not assume any obligation to update the information contained in this conference call.

The agenda for today's conference call is as follows. We will begin this morning's conference call with formal remarks from the management team, and after, we will open the call to take questions. Now I turn the call over to Navios Holdings' Chairman and CEO, Ms. Angeliki Frangou. Angeliki?

Thank you, Michael, and good morning to all of you joining us on today's call. I am pleased with our results for the fourth quarter of 2021. In the fourth quarter, Navios Holdings reported revenue of $156.8 million, adjusted EBITDA of $101.9 million and adjusted net income of $45.8 million. For the full year of 2021, Navios Holdings recorded revenue of $585.8 million, adjusted EBITDA of $353.2 million, and adjusted net income of $130.7 million.

2021 was a challenging year. We worked hard to lay the groundwork for extinguishing event looming maturity, including $614.3 million of ship mortgage notes that were coming due in January 2022. We assembled a [baggage] of $550 million in debt finance. We extinguished the ship mortgage note and also reduced the principal amount on outstanding of our senior secured notes to $155 million. Today, we have a much improved balance sheet and are on the way to further deleverage in a cooperating shipping market.

Please turn to Slide 3 for an overview the Navios structure. As you can see, Navios Holdings operates 36 dry bulk vessels with an average age of 9.1 years. During the third quarter, Navios Partners completed its merger with Navios Acquisition. With 146 vessels across various segments, Navios Partners is one of the largest U.S. publicly-listed shipping companies.

Post-merger, Navios Holdings owns 10.3% of Navios Partners valued at almost $100 million. Navios Logistics operates as a leading infrastructure and logistics company in the Hidrovia region. Navios Holdings maintained its 63.8% ownership in Navios South American Logistics. While the current environment has been challenging in South America, we believe this is a bright asset.

Slide 4 highlights our recent developments. During the fourth quarter, we generated $156.8 million in revenue, $101.9 million in adjusted EBITDA and $45.8 million in adjusted net income. For the full year of 2021, we generated $585.8 million in revenue, $353.2 million in adjusted EBITDA and $130.7 million in adjusted net income. During the fourth quarter, we also achieved a time charter rate per day of $40,033 for our Capesize vessels, $27,781 for our Panamax vessels, and $20,761 for our Ultra-Handymax vessels.

As I mentioned earlier, Navios Holdings retired $614.3 million of its ship mortgage notes during January 15, 2022. The source of funds was as follows: $206.7 million drawn under 2 credit facilities with commercial banks, $77 million in lease arrangements under sale leaseback agreement, $100 million of additional liquidity from NSM plus cash from balance sheet.

With the collaboration of NSM, we also canceled $158.9 million of ship mortgage notes that have been pledged as collateral. You can also see chart at the bottom of the slide that describe our path to addressing repayment for a senior secured notes. Of the $155 million balance outstanding, as of January 1, 2022, we expect to repay $75 million in the first half of 2022, and $80 million balance at maturity on August 15, 2022.

Slide 5 goes to our chartering strategy and potential operating cash flow generation at current market rates, (inaudible) fleet of 36 vessels has 12,993 available days for 2022. So far, for 2022, we have expected 2% of our available days at an average time charter rate of $25,646 per day.

For the year, the breakeven rate is at $8,847 per open day. The total weighted average rate for our fleet opening index days based on current market rates is $28,090 per day. As 67% of our available days are exposed to the spot market, we are positioned to capture available market upside.

I would like now to turn the call to Mr. George Achniotis, Navios Holdings CFO, who will take you through the financials. George?

Thank you, Angeliki. Please turn to Slide 6 for a review of the Navios Holdings financial highlights for Q4 and the full year 2021. Adjusted EBITDA for the quarter was $101.9 million, more than 2.5x than the $37.6 million achieved in Q4 of 2020. EBITDA and net income for the fourth quarter were adjusted to exclude $14 million, which is our share of impairment losses incurred by Navios South American Logistics.

The increase is mainly attributable to a time charter equivalent rate achieved in the quarter of $31,156 a day, which was almost 25x higher than the Q4 2020 TCE of $13,248 per day. Adjusted net income for the quarter was $45.8 million compared to adjusted net loss of $20.5 million in 2020. The increase is mainly due to the increase in EBITDA.

Turning to the full year results. Adjusted EBITDA for the period was $353.2 million, more than double the 2020 adjusted EBITDA of $153.4 million. In addition to the Q4 adjustment, 2020 EBITDA and net income were adjusted to exclude $25.9 million impairment losses relating to 7 dry bulk vessels, and $25.9 million equity income from affiliated companies due to the merger of Navios Partners and Navios Containers in Q1.

Similar to the Q4 results, the increase in adjusted EBITDA was mainly attributable to the increase in the TCE rate achieved in the period of $23,638 per day, which was more than double the $10,543 achieved in 2020. Adjusted net income for 2021 was $130.7 million compared to an adjusted net loss of $67.5 million in 2020. The increase was mainly due to the increase in EBITDA.

Moving to Slide 7 and our balance sheet highlights. As of December 31, 2021, the cash balance was about $137 million compared to about $111 million at the end of December 2020. $84 million of cash was restricted as it was deposited with the (inaudible) the senior ship mortgage notes for the repayment of the notes that took place in January.

Senior and ship mortgage notes reduced by about $162 million compared to the 2020 year-end balance, mainly reflecting the buyback activity during the year. The chart at the bottom of the slide shows the maturity profile of our debt facilities, pro forma for the January repayment of the ship mortgage loans. As you can see, with the exception of the senior secured notes due in August, we don't have any other significant near-term maturities.

Now I will turn the call over to Ioannis Karyotis for his review of the Navios South American Logistics results. Ioannis?

Thank you, George. Slide 8 provides an overview of Navios Logistics. Navios Logistics operates 3 port terminals, which are complemented by our barge fleet for river transportation and product tanker fleet for coastal cabotage trade.

Please turn to Page 9. Throughout 2021, our operating performance was impacted by a soft cabotage market attributed to the weak economic environment in Argentina and adverse river conditions. Q4 2021 adjusted EBITDA was $10.5 million, excluding a $22 million impairment loss on 2 tanker vessels.

The essential role of our port assets in Nueva Palmira, Uruguay within the regional logistics chain has become more apparent. Navios Port is located at the mouth of the river where the loading draft has been unaffected and we now have approximately a 2-meter draft advantage over other river ports in the region.

This is driving additional revenue for our port terminal through our new top off service, which partially mitigated the loss of revenue in Q4 from lower Uruguayan grain exports. Overall, for Q4 2021, the port segment adjusted EBITDA decreased by 3% to $14.6 million. We believe that this competitive advantage will have long-lasting effects as customers reengineer their internal logistics requirements.

In the barge segment, Q4 2021 adjusted EBITDA increased by $1.4 million despite the continued adverse navigation conditions. The low water levels are adversely affecting operations and profitability as barges have limited carrying capacity in reduced [drafts] and trips take longer to complete.

In our cabotage business, Q4 2021 adjusted EBITDA was negative $2.5 million due to lack of employment for some of our vessels as a result of the ongoing weak economic environment in Argentina. Although charter rates remain suppressed, recently, we have seen signs of improved demand for [tight] tier vessels in the Argentinian market.

For Q4 2021, adjusted loss was $20.2 million compared to $9.8 million in the same period last year. Turning to the financial results for the full year. Revenue increased 4% to $222.6 million, adjusted EBITDA was $79.2 million and adjusted loss was $20.7 million.

Please turn to Slide 10. Navios Logistics has no significant debt maturities until 2025. Our bond is trading above par with a yield-to-worst of 7.9%. Cash and cash equivalents at the end of 2021 were $32.6 million.

I would now like to turn the call over to Ted Petrone.

Thank you, Ioannis. Please turn to Slide 11, which presents our diversified dry bulk fleet consisting of 36 vessels totaling 3.9 million deadweight: 12 Capes, 19 Panamaxes, 4 Supramax and 1 Handysize. The average age of the fleet is 9.1 years, 18% younger than the industry average.

Please turn to Slide 12, which highlights our ESG initiatives. Maritime shipping is the most environmentally friendly means of transportation as it is the most energy- and carbon-efficient mode of transport. We aspire to have 0 emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations up to 2 years in advance, and we aim to be one of the first fleets to achieve full compliance.

Navios is a socially-conscious group whose core values include diversity, inclusion and safety. We maintain policies and procedures that provide effective corporate governance and a clear code of ethics. Our Board is composed of a majority of independent directors and independent committees that oversee our management and operations.

Please turn to Slide 14. Rates in all asset classes reached 10-year highs in 2021, reflecting strong demand for both commodities, aided by fleet inefficiencies due to the pandemic. The BDI peaked at 5,650 points on October 7, the highest level since 2008. The market then retreated on the back of Chinese winter steel production limits and a surprising temporary ban on Indonesian coal exports. The BDI continued to retreat at the start of 2022, falling back below 1,300 points for the first time in 12 months.

However, recent efforts by the Chinese government to stimulate the economy and the expectation of increased steel production along with the commencement of the South American grain export season has pushed the BDI back above 2,200. The IMF projects global GDP growth of 4.4% for 2022, led by a 5.9% expansion in China, India and developing Asia. Dry bulk trade is projected to increase by 2% in 2022. Similar to last year, most of the increase is expected to happen in the second half of the year.

Turning to Slide 15. Post-pandemic stimulus measures in the advanced economies and increasing industrial production have fueled demand for the 3 major bulk cargoes. Specifically, seaborne iron ore trade is expected to increase by 1.2% in 2022, with the second half of this year imports increasing by 67 million metric tons or 8.7% over the first half of '22, as increased housing loans and reduced pollution restrictions allow for an increase in Chinese steel production. Forecasts are also for growth in global iron ore imports, excluding China, as the effects of the pandemic recede. Europe's imports are expected to grow by about 8% and Asia, excluding China, is expected to import about 7% more iron ore in '22 than in 2021.

Turning to Slide 16. Gas prices have exceeded coal prices since August '21, and the trend is expected to continue. In spite of the stated goals of carbon neutrality, the gas price surge has driven power plants to switch back to coal-fired power generation. Quarterly seaborne coal imports are expected to grow by 2.4% in 2022, with the same seasonal pattern as iron ore in play as second half '22 coal demand will grow by about 49 million metric tons or 8.2% over the first half of '22.

Please turn to Slide 17. On the grain slide, the global grain trade continues to be supported by ever-increasing world population, food security issues driven by the pandemic as well as increasing protein demand worldwide. World grain production for the '21-'22 crop year will reach a record, according to the USDA. Global grain trade has been growing at 4.8% CAGR since 2008, mainly driven by Asian demand. Overall, global seaborne grain trade will grow about 3.7% in '22, led by a 6% rise in soybean trade.

Please turn to Slide 18. The current order book stands at 6.7% of the fleet, one of the lowest on record. Net fleet growth of '22 is expected at 2.1% and only 0.3% for 2023 as owners commenced removal of tonnage that will be uneconomic as the IMO 2023 CO2 rules come in to force. Vessels over 20 years of age are about 8.5% of the total fleet, which compares favorably with the historical low order book.

In concluding, strong demand for natural resources combined with continued COVID-related logistical disruptions and the slowing pace of newbuilding deliveries all support healthy levels of current and future freight rates.

This concludes my presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Thank you, Ted. This completes our formal presentation. We open the call to questions.

(Operator Instructions) It appears we have no questions in the queue. I will turn the call back over to Angeliki for any additional or closing remarks.

Thank you. This is -- one thing I'd like to mention, this is a bad day for the world and even worse for Europe, and our thoughts are with the Ukrainian people. We have been watching this situation for quite some time as this area is an exporter of a lot of commodities from oil and gas to grains to coal to iron ore. And even though the situation is evolving, the one thing that we know it is going to affect -- we believe that it will affect consumption, supply patterns, and will create inefficiencies.

Now going to Navios Holdings. 2021 was a challenging year. We worked hard to repay $614 million of senior -- of shipping notes as well as reduced our senior notes by $150 million. With all these actions, what we did is to improve our balance sheet and create runway and optionality for our company. Thank you. This is our fourth quarter results. Thank you very much.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.