Navios Maritime Holdings Inc. (NYSE:NM) Q1 2023 Earnings Call Transcript May 24, 2023

Operator: Good morning, and thank you for joining Navios Maritime Holdings First Quarter 2023 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, Chief Financial Officer, Mr. George Akhniotis, 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. Daniela Guerrero, who will take you through the conference call details and safe harbor statements. Daniela?

Daniela Guerrero: 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.

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 the results for the first quarter of 2023, in which we reported net income and EBITDA of around $14.5 million and $40.5 million, respectively, having sold a fleet in 2022 Navios Holdings primary operations consist of its 63.8% controlling ownership interest in Navios South American Logistics, a logistics and infrastructure providers in the Hidrovia region of South America. Navios Holdings also owns a 10.3% ownership interest in Navios Partners, a diversified marine transportation company. We believe that the global macro conditions support heavy growth in the Hidrovia region. As China emerges from the pandemic, we are witnessing increasing demand for minerals and other commodities.

Ukraine has impacted demand for agricultural commodities, and we believe that the continued focus on food security drives agricultural volumes. We are focusing on maximizing the return from our existing assets by being adaptive and offering innovative logistics solutions. We are seeking to leverage Navios Logistics unique infrastructure to capture increased demand from existing and new clients. We are also developing new services as we respond to a changing environment, demanding Navios Solution to emerging challenges. I would like now to turn the call over to Mr. George Akhniotis, who will go through the financials. George?

Georgios Akhniotis: Thank you, Angeliki. Please turn to Slide 5 for a review of the Navios Holdings financial highlights for the first quarter of 2023. Focusing on EBITDA and net income from continuing operations in order to exclude the sale of the dry bulk fleet in Q3 of 2022. EBITDA for the quarter was about $40 million compared to $33 million in Q1 of ’22. The increase was mainly due to the improvement in the results of Navios South American Logistics and an increase from the equity pickup of Navios Partners. Net income for Q1 2023 was $14 million compared to a $15 million loss in Q1 of ’22. 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.

The cash balance was about $61 million compared to about $79 million at the end of December ’22. Out of the $61 million, $25 million was at Navios Holdings and $36 million at Navios South American logistics. Please turn to Slide 7 for an overview of Navios South American Logistics. Navios Logistics operates 3 port terminals, which in Q1 provided about 80% of our EBITDA. These are complemented by a barge fleet for river transportation and product tanker fleet for coastal cabotage trade. We have unique infrastructure assets in the region, which we want to leverage to serve our existing clients and develop new business opportunities. At this point, I’ll turn the call over to Ioannis Karyotis for an update of Navios South American Logistics recent developments.

Q&A Session

Ioannis Karyotis: Thank you, George. Please turn to Slide 8, where we discuss the recent developments. The positive outlook for Minerals transportation and transshipment is driven by favorable macro conditions. In the first quarter of 2023, 828,000 tons were transshipped through our port terminal compared to just 41,000 in the same period last year. Our main client is driving more cargo through our terminal and plus to increase further production. Vetria and 4B Mining, the 2 other regional iron ore producers are also using our terminal to export iron ore. Increased exports of iron ore drive the demand for bus transportation. Since the beginning of the year, we have fixed 6 dry barge convoys on period charters, which should generate about $27 million in revenue.

All our remaining dry barge convoys are also fixed under volume contracts for the year. This year, we also saw some new trading partners emerging, and we adapted our services to offer our clients innovative logistics solutions and capturing 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 Greenport terminal in Uruguay is a cost competitive solution for the storage and transshipment of Brazilian beans destined to Argentina. We expect the new trade to continue throughout the year and mitigate partially the impact of a weak Uruguayan soybean production. Market conditions in cabotage continue to be healthy. In the first quarter of 2023, we’re enjoying improved fleet utilization and for the remaining 9 months of the year, the contracted time charter equivalent for the fixed days of our fleet stands at $27,000 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 Q1 2023, mainly driven by the improved results on the barge segment. The EBITDA was $26.6 million, 10% higher as compared to the same quarter last year. Port segment EBITDA was $20.8 million. The positive impact of higher tariffs at the iron ore port and increased iron ore throughput from the clients 4B Mining and Vetria, was offset by a lower grain throughput mainly related to a reduction in Uruguayan exports. In the Barge segment, Q1 2023 EBITDA increased by $2.3 million to $3.8 million, a significantly increased demand for iron ore and grain transportation has allowed us to fix various barge convoys under period contracts at attractive rates.

In the cabotage business, Q1 2023 EBITDA increased by $0.1 million to $2 million due to more operating days of the fleet. For Q1 2023, the net income was $1.6 million compared to $0.4 million loss in the same period last year, mainly due to the improved barge business performance. Please turn to Slide 10. Navios Logistics has no significant debt maturities until 2025. Cash and cash equivalents at the end of Q1 2023 were $36.6 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 completes our first quarter results. Thank you very much.

Operator: Thank you, ladies and gentlemen. This concludes today’s conference call and webcast. We appreciate your participation, and you may disconnect at any time.

End of Q&A: