Navios Maritime Holdings Inc. Reports Financial Results for the Q2

OREANDA-NEWS. Navios Maritime Holdings Inc. ("Navios Holdings" or "the Company") (NYSE:NM), a global, vertically integrated seaborne shipping and logistics company, today reported financial results for the second quarter and six months ended June 30, 2016.

Angeliki Frangou, Chairman and Chief Executive Officer, stated, "Navios Holdings had a solid second quarter performance, earning $31.0 million in EBITDA, which was relatively in line with 2015. We have $143.2 million of cash as of June 30, 2016 and no material debt maturities until 2019."

Angeliki Frangou continued: "Our scale provides us with significant operating leverage. Navios Holdings’ opex is estimated to be approximately 42% less than the industry average. During the last twelve months, we have also reduced general and administrative expenses by approximately 30%, which we expect to reduce further to a total of 40% by year end. This reduction makes us one of the lowest cost operators among publicly listed dry bulk shipping companies."  

HIGHLIGHTS

Time Charter Coverage

Navios Holdings controls a fleet of 61 vessels totaling 6.3 million dwt, of which 40 are owned and 21 are chartered-in under long-term charters (collectively, the "Core Fleet"). Navios Holdings currently operates 57 vessels (19 Capesize, 18 Panamax, 18 Ultra Handymax and two Handysize vessels) totaling 5.9 million dwt. The current average age of the operating fleet is 7.8 years. Additionally, Navios Holdings has four newbuilding charter-in vessels expected to be delivered at various dates beginning in the fourth quarter of 2016 until 2017.

As of August 22, 2016, Navios Holdings has chartered-out 86.6% and 34.2% of available days for the remaining six months of 2016 and for 2017, respectively (including index-linked charters), which are expected to generate $57.1 million and $20.9 million in base revenue, respectively. The average daily charter-out base rate for the Core Fleet is $8,813 and $15,319 for the remaining six months of 2016 and for 2017, respectively. The average daily charter-in rate for the active long-term charter-in vessels for the remaining six months of 2016 is estimated at $12,421.

The above figures do not include the fleet of Navios South American Logistics Inc. (“Navios Logistics”) and vessels servicing contracts of affreightment.

Exhibit II provides certain details of the Core Fleet of Navios Holdings. It does not include the fleet of Navios Logistics.

Earnings Highlights

See Exhibit I under the heading, "Disclosure of Non-GAAP Financial Measures," for a discussion of EBITDA of Navios Holdings (including Navios Logistics), and of Navios Logistics (on a stand-alone basis), and a reconciliation of such measures to the most comparable measures calculated under U.S. GAAP.

Second Quarter 2016 and 2015 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):

The second quarter 2016 and 2015 information presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

		Three Month Period Ended				Three Month Period Ended
		June 30,				June 30,
		2016				2015
		(unaudited)				(unaudited)
Revenue		$	105,733			$	119,839
Net Loss		$	(26,416	)		$	(24,813	)
Net cash provided by operating activities		$	11,197			$	2,095
EBITDA		$	31,054			$	32,705
Basic Loss per Share		$	(0.29	)		$	(0.27	)

Revenue from dry bulk vessel operations for the three months ended June 30, 2016 was $47.0 million as compared to $53.6 million for the same period during 2015. The decrease in dry bulk revenue was mainly attributable to (i) a decrease in available days of our fleet by 648 days, mainly due to a decrease in short-term charter-in and long-term charter-in fleet available days; and (ii) the decline in the freight market during 2016, as compared to the same period in 2015.

Revenue from the logistics business was $58.8 million for the three months ended June 30, 2016 as compared to $66.2 million for the same period during 2015. The decrease was mainly attributable to (i) a decrease in sales of products in the liquid terminal, due to lower volume and lower price of products sold; (ii) a decrease in products transported in the dry and liquid port terminals; and (iii) a decrease in the number of available days of the cabotage fleet.

EBITDA of Navios Holdings for the three months ended June 30, 2016 decreased by $1.6 million to $31.1 million as compared to $32.7 million for the same period of 2015. The $1.6 million decrease in EBITDA was primarily due to (i) a $14.1 million decrease in revenue; and (ii) a $14.6 million decrease in equity in net earnings from affiliated companies. This overall decrease of $28.7 million was partially mitigated by (i) a $21.8 million decrease in time charter, voyage and logistics business expenses; (ii) a $1.4 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $2.4 million decrease in general and administrative expenses (excluding share-based compensation expenses); (iv) a $0.8 million decrease in other expense, net; and (v) a $0.7 million decrease in net income attributable to the noncontrolling interest.

EBITDA of Navios Logistics was $20.7 million for the three month period ended June 30, 2016 as compared to $22.7 million for the same period in 2015.

Net Loss of Navios Holdings for the three months ended June 30, 2016 was $26.4 million as compared to $24.8 million for the same period of 2015. The $1.6 million increase in Net Loss was mainly due to (i) a decrease in EBITDA by $1.6 million; (ii) a decrease in income tax benefit of $1.0 million; (iii) an increase in amortization for deferred drydock and special survey costs of $0.4 million; and (iv) an increase in share-based compensation expense of $0.1 million. This overall increase was partially mitigated by (i) a decrease in interest expense and finance cost, net by $1.1 million; and (ii) a decrease in depreciation and amortization by $0.4 million.

First Half of 2016 and 2015 Results (in thousands of U.S. dollars, except per share data and unless otherwise stated):

The information for the six month period ended June 30, 2016 and 2015 presented below was derived from the unaudited condensed consolidated financial statements for the respective periods.

		Six Month Period Ended				Six Month Period Ended
		June 30,				June 30,
		2016				2015
		(unaudited)				(unaudited)
Revenue		$	207,220			$	238,119
Net Loss		$	(33,881	)		$	(51,491	)
Net cash provided by operating activities		$	40,137			$	1,739
EBITDA		$	76,478			$	58,946
Basic Loss per Share		$	(0.39	)		$	(0.57	)

Revenue from dry bulk vessel operations for the six months ended June 30, 2016 was $93.3 million as compared to $106.8 million for the same period during 2015. The decrease in drybulk revenue was mainly attributable to the decline in the freight market during 2016, as compared to the same period in 2015.

Revenue from the logistics business was $114.0 million for the six months ended June 30, 2016 as compared to $131.3 million for the same period of 2015. This decrease was mainly attributable to (i) a decrease in sales of products in the liquid terminal, due to lower volume and lower price of products sold; (ii) a decrease in products transported in the dry and liquid port terminals; and (iii) a decrease in the number of available days of the cabotage fleet. This overall decrease was partially mitigated by an increase in dry and liquid cargoes transported in the barge business.

EBITDA of Navios Holdings for the six month period ended June 30, 2016 increased by $17.6 million to $76.5 million as compared to $58.9 million for the same period of 2015. The $17.6 million increase in EBITDA was primarily due to (i) a $45.3 million decrease in time charter, voyage and logistics business expenses; (ii) a $2.5 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iii) a $2.9 million decrease in general and administrative expenses (excluding share-based compensation expenses); and (iv) a $14.3 million increase in other income, net. This overall increase of $65.0 million was partially mitigated by (i) a $30.9 million decrease in revenue; (ii) a $15.5 million decrease in equity in net earnings from affiliated companies; and (iii) a $1.0 million increase in net income attributable to the noncontrolling interest.

EBITDA of Navios Logistics was $41.8 million for the six month period ended June 30, 2016 as compared to $38.3 million for the same period in 2015.

Net Loss of Navios Holdings for the six months ended June 30, 2016 was $33.9 million as compared to $51.5 million for the same period of 2015. The $17.6 million decrease in Net Loss was mainly due to (i) an increase in EBITDA of $17.6 million; (ii) a decrease in interest expense and finance cost, net of $1.5 million; and (iii) a decrease in depreciation and amortization of $1.7 million. This decrease in Net Loss was partially mitigated by (i) an increase in income tax expense of $2.3 million; (ii) an increase of $0.7 million in amortization for deferred drydock and special survey costs; and (iii) an increase of $0.2 million in share-based compensation expense.

Fleet Summary Data:

The following table reflects certain key indicators indicative of the performance of the Navios Holdings' dry bulk operations (excluding the Navios Logistics fleet) and its fleet performance for the three and six month periods ended June 30, 2016 and 2015, respectively.

		Three Month				Three Month				Six Month				Six Month
		Period Ended				Period Ended				Period Ended				Period Ended
		June 30,				June 30,				June 30,				June 30,
		2016				2015				2016				2015
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Available Days (1)			5,198				5,846				11,158				11,184
Operating Days (2)			5,181				5,793				11,037				11,077
Fleet Utilization (3)			99.7	%			99.1	%			98.9	%			99.0	%
Equivalent Vessels (4)			57				64				61				62
TCE (5)		$	8,445			$	7,457			$	7,678			$	7,332

(1) Available days for the fleet are total calendar days the vessels were in Navios Holdings' possession for the relevant period after subtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.

(2) Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.

(3) Fleet utilization is the percentage of time that Navios Holdings' vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels.

(4) Equivalent Vessels is defined as the total available days during a relevant period divided by the number of days of this period.

(5) Time charter equivalent rate (“TCE”) is defined as voyage and time charter revenues less voyage expenses during a relevant period divided by the number of available days during the period.

About Navios Maritime Holdings Inc.

Navios Maritime Holdings Inc. (NYSE:NM) is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coal and grain. 

About Navios South American Logistics Inc.

Navios South American Logistics Inc. is one of the largest logistics companies in the Hidrovia region of South America, focusing on the Hidrovia region river system, the main navigable river system in the region, and on cabotage trades along the eastern coast of South America. Navios Logistics serves the storage and marine transportation needs of its petroleum, agricultural and mining customers through its port terminals, river barge and coastal cabotage operations.

 

EXHIBIT I
NAVIOS MARITIME HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of U.S. dollars — except share and per share data)
			Three Month  Period Ended  June 30, 2016					Three Month  Period Ended  June 30, 2015				Six Month  Period Ended  June 30, 2016				Six Month  Period Ended  June 30, 2015
			(unaudited)					(unaudited)				(unaudited)				(unaudited)
Revenue				$	105,733			$	119,839			$	207,220			$	238,119
Administrative fee revenue from affiliates					5,463				3,882				10,945				7,804
Time charter, voyage and logistics business expenses					(36,095	)			(57,856	)			(82,476	)			(127,790	)
Direct vessel expenses(1)					(34,685	)			(35,748	)			(64,759	)			(66,565	)
General and administrative expenses incurred on behalf of affiliates					(5,463	)			(3,882	)			(10,945	)			(7,804	)
General and administrative expenses(2)					(6,392	)			(8,668	)			(12,830	)			(15,479	)
Depreciation and amortization					(27,132	)			(27,479	)			(46,959	)			(48,684	)
Interest expense and finance cost, net					(26,698	)			(27,838	)			(54,448	)			(55,876	)
Other (expense)/income, net					(2,530	)			(3,321	)			9,134				(5,235	)
Loss before equity in net earnings of affiliated companies					(27,799	)			(41,071	)			(45,118	)			(81,510	)
Equity in net earnings of affiliated companies					3,424				17,968				16,376				31,880
Loss before taxes				$	(24,375	)		$	(23,103	)		$	(28,742	)		$	(49,630	)
Income tax benefit/(expense)					621				1,695				(424	)			1,843
Net loss					(23,754	)			(21,408	)			(29,166	)			(47,787	)
Less: Net income attributable to the noncontrolling interest					(2,662	)			(3,405	)			(4,715	)			(3,704	)
Net loss attributable to Navios Holdings common stockholders				$	(26,416	)		$	(24,813	)		$	(33,881	)		$	(51,491	)
Loss attributable to Navios Holdings common stockholders, basic and diluted				$	(30,387	)		$	(28,906	)		$	(41,822	)		$	(59,657	)
Basic and diluted net losses per share attributable to Navios Holdings common stockholders				$	(0.29	)		$	(0.27	)		$	(0.39	)		$	(0.57	)
Weighted average number of shares, basic and diluted					106,009,049				105,401,820				106,022,826				105,251,590

(1) Includes expenses of Navios Logistics of $21.4 million and $22.9 million for the three months ended June 30, 2016 and 2015, respectively and $38.1 million and $41.0 million for the six months ended June 30, 2016 and 2015, respectively.

(2) Includes expenses of Navios Logistics of $3.5 million and $3.9 million for the three months ended June 30, 2016 and 2015, respectively and $6.8 million and $7.5 million for the six months ended June 30, 2016 and 2015, respectively.                                               

NAVIOS MARITIME HOLDINGS INC.
Other Financial Data
			June 30, 2016				December 31, 2015
			(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents, including restricted cash			$	143,200			$	176,892
Other current assets				143,766				126,067
Deposits for vessels, port terminals and other fixed assets				91,669				73,949
Vessels, port terminal and other fixed assets, net				1,868,668				1,823,961
Other noncurrent assets				449,578				447,151
Goodwill and other intangibles				304,814				310,793
Total assets			$	3,001,695			$	2,958,813
LIABILITIES AND EQUITY
Current liabilities, including current portion of long-term debt, net				245,040				226,856
Senior and ship mortgage notes, net				1,352,860				1,350,941
Long-term debt, net of current portion				252,520				213,423
Other noncurrent liabilities				69,184				57,041
Total stockholders’ equity				1,082,091				1,110,552
Total liabilities and stockholders’ equity			$	3,001,695			$	2,958,813
				Six Month Period Ended June 30, 2016				Six Month Period Ended June 30, 2015
				(unaudited)				(unaudited)
Net cash provided by operating activities			$	40,137			$	1,739
Net cash used in investing activities			$	(112,319	)		$	(18,176	)
Net cash provided by/(used in) financing activities			$	49,299			$	(50,753	)

Disclosure of Non-GAAP Financial Measures

EBITDA is a non-U.S. GAAP financial measure and should not be used in isolation or as substitution for Navios Holdings' results calculated in accordance with U.S. GAAP.

EBITDA represents net (loss)/income attributable to Navios Holdings' common stockholders before interest and finance costs, before depreciation and amortization, before income taxes and before stock-based compensation. We use EBITDA as a liquidity measure and reconcile EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred finance charges and other related expenses, (v) provision for losses on accounts receivable, (vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, and (ix) reclassification to earnings of available–for-sale securities and impairment charges. Navios Holdings believes that EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings also believes that EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of Navios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

 Navios Logistics’ EBITDA is used to measure its operating performance.

The following tables provide a reconciliation of EBITDA of Navios Holdings (including Navios Logistics) and EBITDA of Navios Logistics on a stand-alone basis:

Navios Holdings Reconciliation of EBITDA to Cash from Operations

		June 30,					June 30,
Three Months Ended		2016					2015
(in thousands of U.S. dollars)		(unaudited)					(unaudited)
Net cash provided by operating activities		$	11,197				$	2,095
Net increase/(decrease) in operating assets			447					(27,570	)
Net (increase)/decrease in operating liabilities			(3,753	)				18,343
Net interest cost			26,698					27,838
Deferred finance charges			(1,411	)				(1,046	)
Provision for losses on accounts receivable			(43	)				56
Equity in affiliates, net of dividends received			(783	)				9,109
Payments for drydock and special survey			1,709					7,285
Noncontrolling interest			(2,662	)				(3,405	)
Loss on available-for-sale securities			(345	)				—
EBITDA		$	31,054				$	32,705

Navios Logistics EBITDA Reconciliation to Net Income

		June 30,					June 30,
Three Months Ended		2016					2015
(in thousands of U.S. dollars)		(unaudited)					(unaudited)
Net income		$	7,362				$	9,412
Depreciation and amortization			6,387					6,591
Amortization of deferred drydock and special survey costs			1,787					1,752
Interest expense and finance cost, net			5,829					6,735
Income tax benefit			(694	)				(1,767	)
EBITDA		$	20,671				$	22,723

Navios Holdings Reconciliation of EBITDA to Cash from Operations

		June 30,					June 30,
Six Months Ended		2016					2015
(in thousands of U.S. dollars)		(unaudited)					(unaudited)
Net cash provided by operating activities		$	40,137				$	1,739
Net increase/(decrease) in operating assets			11,776					(59,508	)
Net (increase)/decrease in operating liabilities			(33,156	)				36,630
Net interest cost			54,448					55,876
Deferred finance charges			(2,695	)				(2,155	)
Provision for losses on accounts receivable			(149	)				(10	)
Equity in affiliates, net of dividends received			8,105					14,162
Payments for drydock and special survey			3,072					15,916
Noncontrolling interest			(4,715	)				(3,704	)
Loss on available-for-sale securities			(345	)				—
EBITDA		$	76,478				$	58,946

Navios Logistics EBITDA Reconciliation to Net Income

		June 30,				June 30,
Six Months Ended		2016				2015
(in thousands of U.S. dollars)		(unaudited)				(unaudited)
Net income		$	13,036			$		10,238
Depreciation and amortization			13,061					13,058
Amortization of deferred drydock and special survey costs			3,385					3,463
Interest expense and finance cost, net			12,033					13,548
Income tax expense/(benefit)			282					(1,985	)
EBITDA		$	41,797			$		38,322

EXHIBIT II
Owned Vessels
Vessel Name			Vessel Type		Year Built		Deadweight (in metric tons)
Navios Serenity			Handysize		2011		34,690
Navios Ionian			Ultra Handymax		2000		52,067
Navios Horizon			Ultra Handymax		2001		50,346
Navios Herakles			Ultra Handymax		2001		52,061
Navios Achilles			Ultra Handymax		2001		52,063
Navios Vector			Ultra Handymax		2002		50,296
Navios Meridian			Ultra Handymax		2002		50,316
Navios Mercator			Ultra Handymax		2002		53,553
Navios Arc			Ultra Handymax		2003		53,514
Navios Hios			Ultra Handymax		2003		55,180
Navios Kypros			Ultra Handymax		2003		55,222
Navios Astra			Ultra Handymax		2006		53,468
Navios Ulysses			Ultra Handymax		2007		55,728
Navios Celestial			Ultra Handymax		2009		58,063
Navios Vega			Ultra Handymax		2009		58,792
Navios Magellan			Panamax		2000		74,333
Navios Star			Panamax		2002		76,662
Navios Northern Star			Panamax		2005		75,395
Navios Amitie			Panamax		2005		75,395
Navios Taurus			Panamax		2005		76,596
Navios Asteriks			Panamax		2005		76,801
Navios Galileo			Panamax		2006		76,596
N Amalthia			Panamax		2006		75,318
N Bonanza			Panamax		2006		76,596
Navios Avior			Panamax		2012		81,355
Navios Centaurus			Panamax		2012		81,472
Navios Sphera			Panamax		2016		84,872
Navios Stellar			Capesize		2009		169,001
Navios Bonavis			Capesize		2009		180,022
Navios Happiness			Capesize		2009		180,022
Navios Phoenix			Capesize		2009		180,242
Navios Lumen			Capesize		2009		180,661
Navios Antares			Capesize		2010		169,059
Navios Etoile			Capesize		2010		179,234
Navios Bonheur			Capesize		2010		179,259
Navios Altamira			Capesize		2011		179,165
Navios Azimuth			Capesize		2011		179,169
Navios Ray			Capesize		2012		179,515
Navios Gem			Capesize		2014		181,336
Navios Mars			Capesize		2016		181,259

Long term Chartered-in Fleet in Operation
Vessel Name		Vessel Type		Year Built		Deadweight (in metric tons)		Purchase Option(1)
Navios Lyra		Handysize		2012		34,718		Yes (2)
Navios Primavera		Ultra Handymax		2007		53,464		Yes
Navios Oriana		Ultra Handymax		2012		61,442		Yes
Navios Mercury		Ultra Handymax		2013		61,393		Yes
Navios Venus		Ultra Handymax		2015		61,339		Yes
Navios Aldebaran		Panamax		2008		76,500		Yes
Navios Marco Polo		Panamax		2011		80,647		Yes
Navios Southern Star		Panamax		2013		82,224		Yes
Sea Victory		Panamax		2014		77,095		Yes
Navios Sky		Panamax		2015		82,056		Yes
Navios Amber		Panamax		2015		80,994		Yes
Beaufiks		Capesize		2004		180,310		Yes
King Ore		Capesize		2010		176,800		Yes
Navios Koyo		Capesize		2011		181,415		Yes
Navios Obeliks		Capesize		2012		181,415		Yes
Dream Canary		Capesize		2015		180,528		Yes
Dream Coral		Capesize		2015		181,249		Yes

Long-term Chartered-in Fleet to be Delivered
		Vessel		Delivery			Deadweight	Purchase
Vessels		Type		Date			(in metric tons)	Option
Navios Felix		Capesize		Q4 2016			180,000	Yes
Navios Coral		Panamax		Q4 2016			84,000	Yes
Navios Citrine		Panamax		Q1 2017			81,000	Yes
Navios Dolphin		Panamax		Q1 2017			81,000	Yes

(1) Generally, Navios Holdings may exercise its purchase option after three to five years of service.

(2) Navios Holdings holds the initial 50% purchase option on the vessel.