Navios Maritime Holdings Inc. (NYSE:NM) Q2 2023 Earnings Call Transcript

Navios Maritime Holdings Inc. (NYSE:NM) Q2 2023 Earnings Call Transcript August 24, 2023

Operator: Good morning, and thank you for joining Navios Maritime Holdings Second Quarter 2023 Earnings Conference Call. We are pleased to host the call from the Cayman Islands. With us today from the Company are Chairwoman and CEO, Ms. Angeliki Frangou; Chief Financial Officer, Mr. George Achniotis; Senior Vice President of Strategic Planning, Mr. Ioannis Karyotis; and Navios Logistics Chief Financial Officer, Mr. Enrique Ferrando. I will now turn the call over to Ms. Doris Trifon, [ph] who will take you through the conference call details and safe harbor statements.

Unidentified Company Representative: Thank you, Michael. As a reminder, this conference call is being webcast. To access the webcast, please visit the Investors section of Navios Holdings website at www.navios.com. You’ll see the webcast link in the middle of the page and a copy of the presentation referencing 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 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 Holdings management and are subject to risks and uncertainties, which could cause our actual results to differ materially from the forward-looking statements.

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

Operator: We will begin this morning’s conference call with Navios Holdings’ Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?

Angeliki Frangou: Thank you, Michael, and good morning to all of you joining us on today’s call. I am pleased with our results for the second quarter of 2023 during which we reported revenue of $c and net income of $15.5 million. Navios Holdings owns two assets, a 10.3% ownership in interest in Navios Partners, a diversified marine transportation company and a 63.8% ownership interest in Navios South American Logistics, a logistics and infrastructure provider in the Hidrovia region of South America. We believe that the global conditions support continued growth in the Hidrovia region as the world’s requirements evolve, whether for raw materials for green technology, old world requirements for mineral commodities or dynamically changing grain trade patterns, our region will be providing solutions.

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We intend to play our part by maximizing the return from our existing assets through innovative logistics solutions that leverage our unique infrastructure assets. I would like now to turn the call over to Mr. George Achniotis who will go through the financials. George?

George Achniotis: Thank you, Angeliki. Please turn to slide 5 for a review of the Navios Holdings financial highlights for the second quarter and first six months of 2023. Focusing on EBITDA and net income from continuing operations in order to exclude the sale of the drybulk fleet in Q3 of 2022. EBITDA for the quarter was $42.3 million compared to $41.6 million in 2022. The 2023 results include $1.1 million in Navios Holding shares -- share of the impairment loss from the sale of a vessel in Navios South American Logistics. Net income for the quarter was $15.5 million compared to $16 million in 2022. Moving to the first half financial highlights. EBITDA for the first half of 2023 was $82.8 million compared to $74.9 million in the first half of ‘22.

The improvement is mostly due to an increase in the equity pickup from Navios Partners and the improved results of Navios South American Logistics. Net income for the period was about $30 million compared to $590,000 in the first half of ‘22. Net income for 2022 includes a $24 million upfront fee paid in the form of convertible debenture for the refinancing of the ship mortgage notes in Q1 2022. Moving to slide 6 and our balance sheet highlights. Following the sale of the fleet, the consolidated balance sheet mainly represents the balance sheet of Navios South American Logistics and our investment in Navios Partners. The cash balance was up $69 million compared to about $79 million at the end of December ‘22. Out of the $69 million, $23 million was of Navios Holdings and $46 million of Navios South American Logistics.

Please turn to slide 7 for an overview of Navios South American Logistics. Navios Logistics is a leading infrastructure and logistics company in the Hidrovia region. The company operates three port terminals, which for the first half of the year provided about 71% of our EBITDA. And these are complemented by our barge fleet for river transportation and product tanker fleet for coastal cabotage trade. We have unique infrastructure assets in the region, which we leverage to serve our existing clients and develop new business opportunities. At this point, I turn the call over to Ioannis Karyotis for an update of Navios South American Logistics’ recent developments.

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Q&A Session

Ioannis Karyotis: Thank you, George. Please turn to slide 8, where we discuss the recent developments. Increased mineral exports from the Corumba area in Brazil as well as increased exports of agricultural products from Paraguay, Bolivia, and the State of Mato Grosso in Brazil through the Hidrovia river system are creating a positive environment for our iron ore Port Terminal and our Barge business. In the second quarter record of 2023, a record of 1.2 million tons of minerals were transshipped through our port terminal compared to just 266,000 in the same period last year. Increased exports of iron ore as well as strong soybean and corn crops in Paraguay, drive the demand for barge transportation. Since the beginning of the year, we have fixed 6 dry barge convoys on period charters which should generate about $27 million revenue.

All our remaining dry barge convoys are also fixed under volume contracts for this year. In the market of logistics for agricultural products, trading patterns are dynamic and our company’s adapting its services to offer our clients innovative logistics solutions and capture new business. Argentinian crushing plants are importing soybeans from Brazil to cover the shortfall in the supply of raw material due to the failed domestic soybean crop. Our Grain Port Terminal in Uruguay is a cost competitive solution for the storage and transshipment of Brazilian beans based into Argentina. We expect the new trade to continue through the year and mitigate partially the impact of the weak Uruguayan soybean production this year. Market conditions in cabotage continue to be healthy, and our vessels are performing well.

For the remaining six months of the year, we have fixed 90% of our available days expecting to add a time charter equivalent of $27,143 per day per vessel. I would now like to turn the call over to Enrique Ferrando, Navios Logistics CFO, for the discussion of the financial results.

Enrique Ferrando: Thank you, Ioannis. Please turn to page 9. Navios Logistics had a strong performance during Q2 2023, mainly driven by the improved results on the barge segment. EBITDA and profit in this slide have been adjusted to exclude $1.7 million of impairment losses incurred as a result of the sale of our vessel He Man H, which was completed in August 2023. The adjusted EBITDA was $32.5 million, 3% higher as compared to the same quarter last year. In the barge segment, Q2 2023 EBITDA increased by $4.2 million to $9.5 million. A significantly increased demand for iron ore and grain transportation has allowed us to fix various barge convoys under previous contracts at attractive rates. Port segment EBITDA was $21.1 million, 13% lower as compared to $24.4 million during the same quarter last year.

The positive impact of higher tariff at the iron ore port and increased iron ore throughput from clients, 4B Mining and Vetria was negatively offset by a lower gain throughout, mainly related to a reduction in the Uruguayan exports. In the cabotage business, Q2 2023 adjusted EBITDA remained almost stable at $1.9 million. For Q2 2023, the adjusted profit was $6.1 million, 4% lower as compared to the same period last year. Turning to the financial results for the six-month period ending June 30, 2023, revenue increased 15% to $146.6 million, adjusted EBITDA increased by 6% to $59.1 million, and adjusted profit increased by $1.7 million to $7.7 million compared to the same period last year. Please turn to slide 10. Navios Logistics has no significant debt maturities until 2025.

Cash and cash equivalents at the end of Q2 2023 were $45.9 million. This concludes my presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Angeliki Frangou: Thank you, Enrique. This concludes our second quarter 2023 earnings conference call. Thank you.

Operator: