The only difference between the two preferreds is hat they have slightly different coupons. Other than that, they are pretty much clones.
Look at the most recent earnings presentation on the NM investor relations site and you will find a slide with a diagram showing which entities own stakes in which. Simply, NM owns a sizable stake in NMM (bulkers and container ships on time charter) and NNA (product and crude tankers). It is not publicly listed, but NM also owns a big hunk of Navios South American Logistics, which is an SEC filer (so you can see their reports broken out separately).
My model was high (.16 to .17) for NNA Q2 vs. actual results (.14). I think what happened is a lot of the uplift in rates in the latter 2/3 of Q2 got pushed into Q3 since there is usually a lag effect with profit sharing charters (If rates spike in June, I book a high rate and actually earn the money on the high rate charter in July/August). So I suspect that my model may slightly underestimate the TCE NNA will get via profit sharing charters in Q3 given the outsized strength of the tanker spot markets in June through early August. That said, with the updated charters they are sporting I come up with .15 for EPS in Q3. A lot depends on what rates do between now and the end of the quarter, of course, so I expect that my estimate will shift between now and the end of the quarter. If they achieve this level of earnings NNA would generate about enough free cash to complete roughly half the remaining buyback authorization after paying dividends.
All seasonal stuff. Watch what happens when the usual 4th quarter spike kicks in.
The laughable thing is that we have been hearing the drumbeat of "NNA has too much debt." Now that they are in a good position to delever and starting to do so, everyone hates that idea. Silly, No wonder management largely ignores what is being said by outsiders and does the sensible thing.
I assume people were looking for a dividend increase? This market makes little sense in any case. Look at the silly valuation on TNP, for example.
Just a guess, but a dividend increase is not coming until:
- Leverage is down to the target range or close to it
- They have signed a bunch of long term time charters, and
- Most or all of the $50MM repurchase authorization has been used.
Considering the average price of the 2MM buyback completed thus far was 3.80/share, I imagine NNA is in the market buying if they are out of quiet period.
This is a really, really stupid selloff. EPS is likely to be .60 or better for 2015. Should this stock really be trading at a 6 PE when they are making money, paying down debt and buying back stock?
The call faded out a bit for me just as Ms. Frangou answered the question about deployment of cashflow. What I think I heard is that deleveraging down to 50 to 55% over the next year or so is priority 1. She mentioned that a way to do that was to buy ships for cash, so I take that to mean that if an attractive ship purchase opportunity comes up they would do it and call it delevering. She did say that share buybacks and the dividend were in the mix as well. I don't expect much on the dividend until they have gotten down to 55% net debt to equity and signed some longer term charters. That is fine with me.
I'd guess if you backed out what the 1 year rate in 9 moths' time from the current term structure of time charter rates, 18 and change would be reasonably attractive.
The profit share was 4MM or so light vs. my model and I wonder how much is timing differences/recognition vs. lower than index rates being used to calculate.
There were no new long term charters signed if you look at the presentation. A bunch of charterers exercised their options to extend and a VLCC was signed to a new index-linked charter with a floor. There are two VLCCs coming off charter in November and they are the first ones available to slap a long term deal on. I would guess that we will start seeing that happen, but management clearly wants to be selective in when and with whom they ink those charters.
Solid quarter. I like to see them finally buying back stock. The call should be interesting.
Just curious, have you ever known management to engage in the kind of rah-rah nonsense that short termers want to hear on conference calls? Not me. I think they manage this company for the long term (years/decades). While I would like a nice pop off earnings, I doubt management cares and I expect that we will see measured enthusiasm from management that will likely be misunderstood by investors.
Consensus has crept up to .13. I imagine they will beat that.
Tankers in general are suddenly out of favor and all year the market has largely ignored the best tanker rate environment in years. Why? Search me. Cyclicals in general are hated right now (energy, shipping, manufacturing, etc.). I am guessing we will see management start taking actions on trimming debt:equity levels and perhaps raising the dividend, especially if they start signing more time charters and perhaps dropping more ships down to NAP.
Gee, maybe management called it right on the likely demand upswing after all those export-focused refineries came on line?
I presume the big headline to the effect that VLCC rates dropped a lot on tradewinds had something to do with it.