SEC Form 6-K filed by Navios Maritime Holdings Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

Dated: December 14, 2023

Commission File No. 001-33311

 

 

NAVIOS MARITIME HOLDINGS INC.

 

 

Strathvale House, 90 N Church Street,

P.O. Box 309, Grand Cayman,

KY1-1104 Cayman Islands

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F  ☒            Form 40-F  ☐

 

 

 

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations of Navios Maritime Holdings Inc. (“Navios Holdings”, “we” or the “Company”) for the three and nine-month periods ended September 30, 2023 and 2022. Navios Holdings’ financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Holdings’ Annual Report on Form 20-F for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) and the unaudited interim condensed consolidated financial statements and the accompanying notes included elsewhere in this Report.

This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein other than statements of historical fact, including statements regarding business and industry prospects or future results of operations or financial position, should be considered forward-looking. These forward-looking statements are based on Navios Holdings’ current expectations and observations. Factors that could cause actual results to differ materially include, but are not limited to risks, relating to: global and regional economic and political conditions; changes in production or demand for the transportation or storage of grain and mineral commodities and petroleum products; the planned development of the Port Murtinho Terminal and Nueva Palmira Free Zone port terminal facilities by Navios South American Logistics Inc. (“Navios Logistics”), a consolidated subsidiary of the Company; the ability and willingness of charterers to fulfill their obligations to the affiliates in which we are invested; prevailing charter rates; drydocking and repairs; changing vessel crews and availability of financing; potential disruption of shipping routes due to accidents, wars, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of global pandemics; the aging of our affiliates’ fleets and resultant increases in operating costs; our affiliates’ loss of any customer or charter or vessel; the financial condition of our affiliates’ customers; changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors; increases in costs and expenses related to the operation of vessels of our affiliates, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance, and general and administrative expenses; the expected cost of, and the ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by charterers; competitive factors in the markets in which we and our affiliates operate; our affiliates’ ability to make distributions and dividends to us; the value of our subsidiaries and affiliates, and risks associated with operations outside the United States.

Other factors that could cause our actual results to differ from our current expectations and observations include, but are not limited to, those discussed under Part I, Item 3D — Risk Factors in Navios Holdings’ Annual Report on Form 20-F for the year ended December 31, 2022. We caution readers of this Report not to place undue reliance on the forward-looking statements, which reflect our view only as of the date of this document. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. We do not undertake any obligation to publicly update or revise any forward-looking statement to reflect changes in assumptions, the occurrence of unanticipated events, changes in future operating results over time, or otherwise.

Recent Developments

Buyout Offer

In October 2023, the Company entered into a definitive merger agreement with N Logistics Holdings Corporation (“NLHC”), a company affiliated with the Company’s Chairwoman and Chief Executive Officer, Angeliki Frangou, pursuant to which NLHC acquired all of the outstanding shares of common stock of the Company not already owned by NLHC (“Common Shares”) for $2.28 per share in cash, without interest (the “Merger”).

 

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The Merger was approved by the Company’s stockholders at a special meeting of the Company’s stockholders held on December 13, 2023 and was completed on December 14, 2023.

Navios Logistics

In October 2023, Navios Logistics agreed to charter-in the Navios Vega, a 2009-built Ultra-Handymax vessel, following her modification to a ship-to-ship transhipper vessel, from Navios Maritime Partners L.P. for a period of five years at a rate of $25.8 thousand net per day. This transaction was negotiated by, and unanimously approved by, the conflicts committee of Navios Logistics. Navios Vega is expected to be delivered in January 2024.

In October 2023, Navios Logistics entered into a five-year finance lease contract for the construction of six barges to be delivered no later than the end of the second quarter of 2024 (the “Six Finance Lease Barges”). The finance lease contract for the Six Finance Lease Barges will have similar terms to terms of the September 2023 finance lease contract entered into by Navios Logistics for the construction of twelve barges to be delivered no later than the end of the first quarter of 2024 (the “Twelve Finance Lease Barges”). For a detailed discussion of the Twelve Finance Lease Barges and Six Finance Lease Barges, refer to the interim condensed consolidated financial statements included elsewhere in this Report.

Overview

General

Navios Holdings owns (i) a controlling equity stake in Navios Logistics, one of the largest infrastructure and logistics companies in the Hidrovia region of South America; and (ii) an interest in Navios Maritime Partners L.P. (“Navios Partners”) (NYSE:NMM), an international shipping company, listed on the New York Stock Exchange, that owns and operates dry cargo and tanker vessels.

In September 2022, Navios Holdings completed the sale of its 36-vessel dry bulk fleet for consideration consisting of cash and the assumption of bank debt and finance leases related to the vessels, and subject to a working capital adjustment at closing (the “Transaction”), to Navios Partners. The former dry bulk vessel operations were historically a separate reportable segment of the Company. Subsequent to the closing of the Transaction, the results of the dry bulk vessel operations are reported as discontinued operations for all periods presented.

Navios South American Logistics Inc.

Navios Logistics, a consolidated subsidiary of the Company, was incorporated under the laws of the Republic of the Marshall Islands on December 17, 2007. Navios Logistics believes it is one of the largest infrastructure and logistics companies in the Hidrovia region river system, the main navigable river system in the region (the “Hidrovia region”), and on the cabotage trades along the southeastern coast of South America. Navios Logistics operates with three reportable segments: the Port Terminal Business, the Cabotage Business and the Barge Business.

Port Terminal Business

Navios Logistics owns three port storage and transfer facilities: a grain port terminal (the “Grain Port Terminal”), which supports agricultural and forest-related exports; an iron ore port terminal (the “Iron Ore Port Terminal” and, together with the Grain Port Terminal, the “Dry Port Terminals”), which supports mineral-related exports; and a liquid port terminal (the “Liquid Port Terminal”), which provides tank storage for refined petroleum products. The Grain Port Terminal and the Iron Port Terminal are located in Nueva Palmira, Uruguay, and the Liquid Port Terminal is located in San Antonio, Paraguay. Since October 2022, Navios Logistics has been providing bunkering services using floating storage capacity in the port of Nueva Palmira. The Navios Logistics port facilities in Nueva Palmira have a total static grain-storage capacity of 460,000 metric tons, and a mineral-ore-stockpile capacity of 1,246,000 tons following the completion of a new stockpile area in the second quarter of 2023. The Liquid Port Terminal has a total static storage capacity of 65,660 cubic meters.

Cabotage Business

Navios Logistics owns and operates ocean-going vessels to support the transportation needs of its customers in the South American coastal-trade business. Its fleet consists of five ocean-going product tanker vessels and one river and estuary tanker vessel. Navios Logistics contracts its vessels operating in the Cabotage Business either on a time-charter basis or on a contract of affreightment (“CoA”) basis.

 

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Barge Business

Navios Logistics services the Argentine, Bolivian, Brazilian, Paraguayan and Uruguayan river transportation markets through its fleet of 300 vessels in its Barge Business, including 30 pushboats and 270 barges. Navios Logistics operates different types of pushboats and wet and dry barges for delivering a wide range of dry and liquid products between ports in Hidrovia region. Navios Logistics typically contracts its vessels operating in the Barge Business either on a time-charter basis or on a CoA basis. Navios Logistics provides transportation for dry cargo (cereals, cotton pellets, soybeans, wheat, limestone (clinker), mineral iron, and rolling stones), liquid cargo (hydrocarbons such as crude oil, gas oil, naphtha, fuel oil and vegetable oils) and liquefied cargo (liquefied petroleum gas or “LPG”).

As of September 30, 2023, Navios Holdings owned 63.8% of Navios Logistics.

Navios Partners - Affiliate Company (Not Consolidated under Navios Holdings)

Navios Partners is an international owner and operator of dry cargo and tanker vessels and is engaged in the seaborne transportation services of a wide range of liquid and dry cargo commodities. Types of commodities Navios Partners transports include crude oil, refined petroleum, chemicals, iron ore, coal, grain and fertilizer. In addition to commodity products, Navios Partners also transports containers. Navios Partners charters its vessels under short-, medium-, and longer-term charters.

As of both September 30, 2023 and December 31, 2022, Navios Holdings had a 10.3% ownership interest in Navios Partners. Incentive distribution rights are held by a consolidated subsidiary of Navios Holdings.

Fleet

Following the completion of the Transaction, the current core fleet of the Company consists of the Navios Logistics fleet.

Navios Logistics’ Fleet

The following is the current core fleet of Navios Logistics as presented in Navios Logistics’ 6-K for the period ended September 30, 2023 filed with SEC:

 

Pushboats/ Barges		Number of Vessels				Capacity/BHP				Description
Pushboat Fleet			30				107,920 BHP			Various Sizes and Horsepower
Dry Barges			211				403,050 DWT			Dry Cargo
Tank Barges			56				173,229 m3			Liquid Cargo
LPG Barges			3				4,752 m3			LPG
Total			300

 

Product Tanker Fleet *		Year Built				DWT				Description
Estefania H			2008				12,000			Double-hulled Product Tanker
Makenita H			2009				17,508			Double-hulled Product Tanker
Sara H			2009				9,000			Double-hulled Product Tanker
San San H			2010				16,871			Double-hulled Product Tanker
Ferni H			2010				16,871			Double-hulled Product Tanker
Elena H			2018				4,999			Double-hulled Product Tanker
Total							77,249

 

*	In August 2023, Navios Logistics completed the sale of the vessel He Man H. For additional information on the sale of He Man H, please see Note 4 “Vessels, port terminals and other fixed assets, net” included elsewhere in this Report.

Factors Affecting Navios Holdings’ Results of Operations

Navios Holdings believes the principal factors that will affect its future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping and logistics industry generally and that affect conditions in countries and markets in which its affiliates engage in business. Please see “Item 3. Key Information — D. Risk Factors” included in Navios Holdings’ Annual Report on Form 20-F for the year ended December 31, 2022 filed with the SEC for a discussion of certain risks inherent in their businesses.

 

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Chartering Arrangements

Navios Logistics continually monitors developments in the shipping industry and makes decisions based on an individual vessel and a segment basis, as well as on their view of overall market conditions, in order to implement their business strategy. In its Barge Business, Navios Logistics typically operates under a mix of time charters and CoAs (some of which have minimum guaranteed volumes) and spot contracts. In its Cabotage Business, Navios Logistics typically operates under time charters with terms in excess of one year. Some of its charters provide for fixed pricing, minimum volume requirements, and adjustment formulas for labor cost and fuel price.

Contract Rates

Historically, the shipping and logistics industry has been highly volatile. In order to maximize the utilization of Navios Logistics fleet and storage capacity, Navios Logistics must be able to renew the contracts that employ its fleet and ports upon the expiration or termination of current contracts. This ability depends mainly upon economic conditions in the economic sectors in which the vessels, barges and pushboats operate, upon changes in the supply and demand for vessels, barges and pushboats, and upon changes in the supply and demand for the transshipment and storage of commodities.

Seasonality

Certain of Navios Logistics’ businesses have seasonal aspects, and seasonality affects the results of its operations and revenues, particularly in the first and last quarters of each year. The high season for the Dry Port Terminals’ Uruguayan operations occurs from April to September and is linked to the South American harvest and the arrival of barges down the river. The high season for the Barge Business is between February and July as a result of the South American harvest and higher river levels. During the South American late spring and summer, mainly from November to January, when the low water level in the northern Hidrovia waterway could adversely affect operations of the Barge Business and the volumes it transports. To the extent water levels are insufficient to accommodate the draft of a heavily laden vessel, a vessel may be only partially loaded, generating lower revenue under agreements where revenue is based on volume of cargo loaded. If water levels on a waterway are too low, vessels may be entirely prevented from loading and navigating. In addition, low water levels create difficult navigation conditions, causing voyages to last longer resulting in increased voyage expenses. Such circumstances reduce the effective available carrying capacity of the vessel for the year. The Liquid Port Terminal and the Cabotage Business are not significantly affected by seasonality as their operations are primarily linked to refined petroleum products, and thus not significantly affected by water levels.    

Period over Period Comparisons

For the Three-Month Period Ended September 30, 2023 Compared to the Three-Month Period Ended September 30, 2022

The following table presents consolidated revenue and expense information for the three-month periods ended September 30, 2023 and 2022, respectively. This information was derived from the unaudited interim condensed consolidated statement of comprehensive income of Navios Holdings for the respective periods. Following the closing of the Transaction (as defined herein), the results of the dry bulk vessel operations have been reported as discontinued operations for all periods presented.

 

		Three-Month Period Ended September 30, 2023				Three-Month Period Ended September 30, 2022
		(unaudited)				(unaudited)
Revenue		$	79,238			$	74,437
Time charter, voyage and logistics business expenses			(24,225	)			(20,313	)
Direct vessel expenses			(23,685	)			(21,125	)
General and administrative expenses			(4,857	)			(4,636	)
Depreciation and amortization			(7,502	)			(8,085	)
Interest expense and finance cost, net			(16,004	)			(16,169	)
Impairment loss/loss on sale of vessels, net			—				(3,195	)
Other income/(expense), net			91				(1,205	)
Income/(loss) before equity in net earnings/(losses) of affiliate companies			3,056				(291	)
Equity in net earnings/(losses) of affiliate companies			12,755				(70,173	)
Income/(loss) before taxes		$	15,811			$	(70,464	)
Income tax benefit			422				381
Net income/(loss) from continuing operations		$	16,233			$	(70,083	)
Net income from discontinued operations		$	—			$	109,638
Net income		$	16,233			$	39,555
Less: Net income attributable to the noncontrolling interest			(1,818	)			(597	)
Net income attributable to Navios Holdings		$	14,415			$	38,958

 

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Revenue: Revenue from continuing operations was increased by $4.8 million, or 6.4% to $79.2 million for the three-month period ended September 30, 2023, as compared to $74.4 million for the same period in 2022. The increase was mainly attributable to (i) a $7.3 million increase in revenue from the Barge Business mainly due to time charter-out contracts that were in place for iron ore transportation; and (ii) a $7.0 million increase attributable to the sale of fuel products in connection with the provision of bunkering services in the port of Nueva Palmira, which commenced in October 2022. The overall increase was partially mitigated by (i) $7.1 decrease in revenue from the Port Terminal Business, mainly attributable to the Grain Port Terminal as a result of lower grain throughput from a decline in Uruguayan exports; and (ii) a $2.4 million decrease in revenue from the Cabotage Business, mainly due to the sale of the He Man H completed in August 2023, which resulted in a decrease in operating days compared to the same period during 2022.

Time charter, voyage and logistics business expenses: Time charter, voyage and logistics business expenses from continuing operations increased by $3.9 million, or 19.3%, to $24.2 million for the three-month period ended September 30, 2023, as compared to $20.3 million for the three-month period ended September 30, 2022. The increase was attributable to (i) a $6.7 million increase in cost of products sold, mainly attributable to an increase in fuel products sold in connection with the provision of bunkering services in the port of Nueva Palmira, which commenced in October 2022; and (ii) a $1.8 million increase in port terminal expenses of the Port Terminal Business, mainly due to higher volumes transshipped in the Iron Ore Port Terminal. The overall increase was partially mitigated by a $4.6 million decrease in time charter and voyage expenses of the Barge Business, mainly due to decreased bunker consumption resulting from time charter-out contracts in place for iron ore transportation during the current period.

Direct vessel expenses: Direct vessel expenses from continuing operations increased by $2.6 million, or 12.1%, to $23.7 million for the three-month period ended September 30, 2023, as compared to $21.1 million for the three-month period ended September 30, 2022. The increase was attributable to a $4.3 million increase in direct vessel expenses of the Barge Business, mainly due to increased crew costs and repairs and maintenance; partially mitigated by a $1.7 million decrease in direct vessel expenses of the Cabotage Business mainly, due to decreased crew costs. Direct vessel expenses from Navios Logistics include crew costs, victual costs, dockage expenses, lubricants, spares and stores, insurance, and repair and maintenance.

General and administrative expenses: General and administrative expenses from continuing operations increased by $0.2 million, or 4.8%, to $4.9 million for the three-month period ended September 30, 2023, as compared to $4.6 million for the three-month period ended September 30, 2022. The increase was mainly attributable to a $0.4 million increase in general and administrative expenses related to Navios Logistics due to an increase in professional fees, salaries and travel expenses. The overall increase was partially mitigated by a $0.2 million decrease in general and administrative expenses related to Navios Holdings for continuing operations. For each of the three-month periods ended September 30, 2023 and 2022, general and administrative expenses, related to Navios Holdings for continuing operations, under the Administrative Services Agreement (as defined herein), amounted to $0.1 million.

Depreciation and Amortization: Depreciation and amortization from continuing operations decreased by $0.6 million to $7.5 million as compared to $8.1 million for the three-month period ended September 30, 2022.

Interest expense and finance cost, net: Interest expense and finance cost, net from continuing operations decreased by $0.2 million, or 1.0%, to $16.0 million for the three-month period ended September 30, 2023, as compared to $16.2 million for the same period in 2022. This decrease was mainly due to (i) a $0.4 million decrease in interest expense and finance cost, net from Navios Logisticsand (ii) a $0.2 million increase in interest expenses and finance cost, net, from Navios Holdings for continuing operations, mainly due to the 4% PIK interest on the Convertible Debenture (as defined herein).

Impairment loss/ loss on sale of vessels, net: Impairment loss/loss on sale of vessels, net from continuing operations incurred in the three-month period ended September 30, 2023 was $0 million as compared to $3.2 million for the same period in 2022. Impairment loss for the three-month period ended September 30, 2022 was due to (i) $0.8 million incurred in the Cabotage Business resulting from the sale of the vessel Malva H; and (ii) $2.4 million incurred in the Barge Business in relation to certain barges.

Other income/(expense), net: Other income, net from continuing operations increased by $1.3 million to $0.1 million for the three-month period ended September 30, 2023, as compared to $1.2 million other expense, net for the same period in 2022. This increase was due to a $1.7 million increase in the Cabotage Business mainly due to decreased taxes other than income taxes derived from a decrease in revenues. This overall increase was partially mitigated by (i) a $0.4 million increase in other expense, net in the Barge Business mainly due to an increase in taxes other than income tax; and (ii) a less than $0.1 million increase in other expenses, net in the Port Terminal Business.

 

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Equity in net earnings/(losses) of affiliate companies: Equity in net earnings of affiliate companies increased by $82.9 million, to $12.8 million for the three-month period ended September 30, 2023, as compared to $70.2 million equity in net losses for the same period in 2022, due to a $97.7 million other-than- temporary impairment (“OTTI”) loss related to our investment in Navios Partners incurred during the three-month period ended September 30, 2022, mitigated by a $14.8 million decrease in equity method income from Navios Partners.

Income tax benefit: Income tax benefit from continuing operations remained stable to $0.4 million for both three-month periods ended September 30, 2023 and 2022.

Net income from discontinued operations: Net income from discontinued operations was $0 for the three-month period ended September 30, 2023, as compared to $109.6 million for the three-month period ended September 30, 2022.

An analysis of the amounts recorded in respect of discontinued operations in the three-month period ended September 30, 2022 is presented as follows:

 

		Three-Month Period Ended September 30, 2022
Revenue		$	46,309
Time charter, voyage and logistics business expenses			(6,255	)
Direct vessel expenses			(7,904	)
General and administrative expenses			(2,269	)
Depreciation and amortization			(5,064	)
Interest expense and finance cost, net			(17,680	)
Non-operating other expense			(61,730	)
Gain from discontinued operations			169,631
Other expense, net			(5,387	)
Income tax expense			(13	)
Net income from discontinued operations		$	109,638

Net income attributable to the noncontrolling interest: Net income attributable to the noncontrolling interest increased by $1.2 million to $1.8 million for the three-month period ended September 30, 2023, as compared to $0.6 million for the same period in 2022. This increase was mainly due to an increase in net income from Navios Logistics for the three-month period ended September 30, 2023, as compared to the same period in 2022, which translates into a higher amount allocated to non-controlling interest.

For the Nine-Month Period Ended September 30, 2023 Compared to the Nine-Month Period Ended September 30, 2022

The following table presents consolidated revenue and expense information for the nine-month periods ended September 30, 2023 and 2022, respectively. This information was derived from the unaudited interim condensed consolidated statement of comprehensive income of Navios Holdings for the respective periods. Following the closing of the Transaction (as defined herein), the results of the dry bulk vessel operations have been reported as discontinued operations for all periods presented.

 

		Nine-Month Period Ended September 30, 2023				Nine-Month Period Ended September 30, 2022
		(unaudited)				(unaudited)
Revenue		$	226,549			$	202,776
Time charter, voyage and logistics business expenses			(63,993	)			(53,459	)
Direct vessel expenses			(63,510	)			(56,655	)
General and administrative expenses			(17,220	)			(13,430	)
Depreciation and amortization			(23,159	)			(24,157	)
Interest expense and finance cost, net			(48,812	)			(48,012	)
Impairment loss/ loss on sale of vessels, net			(1,651	)			(3,195	)
Non-operating other finance cost			—				(24,000	)
Other expense, net			(3,147	)			(3	)
Income/(loss) before equity in net earnings/(losses) of affiliate companies			5,057				(20,135	)
Equity in net earnings/(losses) of affiliate companies			44,052				(47,214	)
Income/(loss) before taxes		$	49,109			$	(67,349	)
Income tax (expense)/benefit			(985	)			81
Net income/(loss) from continuing operations		$	48,124			$	(67,268	)
Net income from discontinued operations		$	—			$	148,973
Net income		$	48,124			$	81,705
Less: Net income attributable to the noncontrolling interest			(3,764	)			(2,787	)
Net income attributable to Navios Holdings		$	44,360			$	78,918

 

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Revenue: Revenue from continuing operations increased by $23.8 million, or 11.7% to $226.5 million for the nine-month period ended September 30, 2023, as compared to $202.8 million for the same period in 2022. The increase was mainly attributable to (i) a $17.6 million increase in revenue from the Barge Business, mainly attributable to time charter-out contracts that were in place for iron ore transportation; and (ii) a $14.9 million increase in revenue attributable to the sale of fuel products in connection with the provision of bunkering services in the port of Nueva Palmira, which commenced in October 2022. The overall increase was partially mitigated by (i) a $6.4 million decrease in revenue from the Port Terminal Business, mainly attributable to the Grain Port Terminal as a result of lower grain throughput resulting from a decline in Uruguayan exports, partially offset by higher tariffs and volumes transshipped at the Iron Ore Port Terminal; and (ii) a $2.3 million decrease in revenue from the Cabotage Business, mainly due to the sale of the He Man H completed in August 2023, which resulted in a decrease in operating days compared to the same period during 2022.

Time charter, voyage and logistics business expenses: Time charter, voyage and logistics business expenses, from continuing operations increased by $10.5 million, or 19.7%, to $64.0 million for the nine-month period ended September 30, 2023, as compared to $53.5 million for the nine-month period ended September 30, 2022. The increase was attributable to (i) a $13.8 million increase in cost of products sold, mainly attributable to an increase in fuel products sold in connection with the provision of bunkering services in the port of Nueva Palmira, which commenced in October 2022; and (ii) a $5.5 million increase in port terminal expenses of the Port Terminal Business, mainly due to higher volumes transshipped in the Iron Ore Port Terminal. The overall increase was partially mitigated by (i) a $8.3 million decrease in time charter and voyage expenses of the Barge Business, due to decreased bunker consumption resulting from the time charter-out contracts in place for iron ore transportation during the current period; and (ii) a $0.4 million decrease in time charter and voyage expenses of the Cabotage Business.

Direct vessel expenses: Direct vessel expenses, from continuing operations increased by $6.9 million, or 12.1%, to $63.5 million for the nine-month period ended September 30, 2023, as compared to $56.7 million for the same period in 2022. The increase was attributable to a $7.7 million increase in direct vessel expenses of the Barge Business, mainly due to increased crew costs, repairs and maintenance and stores; partially mitigated by a $0.9 million decrease in direct vessel expenses of the Cabotage Business, mainly due to increased crew costs. Direct vessel expenses from Navios Logistics include crew costs, victual costs, dockage expenses, lubricants, spares and stores, insurance, and repairs and maintenance.

General and administrative expenses: General and administrative expenses from continuing operations increased by $3.8 million, or 28.2%, to $17.2 million for the nine-month period ended September 30, 2023, as compared to $13.4 million for the nine-month period ended September 30, 2022. The increase was mainly attributable to a $2.8 million increase in general and administrative expenses related to Navios Logistics due to mainly to an increase in payroll, travel expenses and other general and administrative expenses; and a $1.0 million increase in general and administrative expenses related to Navios Holdings for continuing operations. For each of the nine-month periods ended September 30, 2023 and 2022, general and administrative expenses, related to Navios Holdings for continuing operations, under the Administrative Services Agreement (as defined herein), amounted to $0.4 million.

Depreciation and amortization: Depreciation and amortization expense, from continuing operations decreased by $1.0 million, or 4.1%, to $23.3 million for the nine-month period ended September 30, 2023, as compared to $24.2 million for the same period in 2022.

Interest expense and finance cost, net: Interest expense and finance cost, net from continuing operations increased by $0.8 million, or 1.7%, to $48.8 million for the nine-month period ended September 30, 2023, as compared to $48.0 million for the same period in 2022. This increase was mainly due to a $1.4 million increase in interest expenses and finance cost, net, from Navios Holdings for continuing operations, mainly due the 4% PIK interest on the Convertible Debenture (as defined herein) partially mitigated by a $0.6 million decrease in interest expense and finance cost, net from Navios Logistics.

Impairment loss/ loss on sale of vessels, net: Impairment loss/loss on sale of vessels, net from continuing operations decreased by $1.5 million, to $1.7 million for the nine-month period ended September 30, 2023, as compared to $3.2 million for the same period in 2022. Impairment loss for the nine-month period ended September 30, 2023 was due to $1.7 million incurred in the Cabotage Business resulting from the sale of the vessel He Man H. Impairment loss for the nine-month period ended September 30, 2022 was due to (i) $0.8 million incurred in the Cabotage Business resulting from the sale of the vessel Malva H; and (ii) $2.4 million incurred in the Barge Business in relation to certain barges. Please also refer to Note 4 “Vessels, Port Terminal and other fixed assets, net” included elsewhere in this Report.

 

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Non-operating other finance cost: In respect of NSM Loans (as defined herein), Navios Holdings paid a $24.0 million upfront fee in the form of a Convertible Debenture issued in January 2022. For information on the Convertible Debenture, see Note 9 “Transactions with Related Parties” to the interim condensed consolidated financial statements included elsewhere in this Report.

Other expense, net: Other expense, net from continuing operations increased by $3.1 million to $3.1 million for the nine-month period ended September 30, 2023, as compared to less than $0.1 million for the same period in 2022. This increase was due to (i) a $3.9 million increase in other expense, net in the Barge Business mainly due to an increase in taxes other than income tax and other expenses; and (ii) a $0.6 million increase in other expense, net in the Port Terminal Business mainly due to an increase in provision for losses on accounts receivable. The overall increase was partially mitigated by a $1.5 million decrease in other expense, net in the Cabotage Business deriving mainly due decreased taxes other than income taxes derived from a decrease in revenues.

Equity in net earnings/(losses) of affiliate companies: Equity in net earnings of affiliate companies increased by $91.3 million to $44.1 million for the nine-month period ended September 30, 2023, as compared to $47.2 million equity in net losses of affiliate companies for the same period in 2022, mainly due to a $97.7 million OTTI loss related to our investment in Navios Partners incurred during the nine-month period ended September 30, 2022, partially mitigated by a $6.4 million decrease in equity method income from Navios Partners.

Income tax (expense)/benefit: Income tax expense from continuing operations increased by $1.1 million to $1.0 million for the nine-month period ended September 30, 2023, as compared to $0.1 million income tax benefit for the same period in 2022. The total change in income tax was mainly attributable to Navios Logistics due to a (i) $0.9 million increase in income tax expense of the Cabotage Business; and (ii) a $0.2 million in decrease in income tax benefit of the Barge Business.

Net income from discontinued operations: Net income from discontinued operations was $0 for the nine-month period ended September 30, 2023, as compared to $149.0 million for the nine-month period ended September 30, 2022.

An analysis of the amounts recorded in respect of discontinued operations in the nine-month period ended September 30, 2022 is presented as follows:

 

		Nine-Month Period Ended September 30, 2022
Revenue		$	204,981
Time charter, voyage and logistics business expenses			(38,515	)
Direct vessel expenses			(30,686	)
General and administrative expenses			(9,429	)
Depreciation and amortization			(18,135	)
Interest expense and finance cost, net			(58,791	)
Loss on bond extinguishment, net			(221	)
Non-operating other expense			(61,730	)
Gain from discontinued operations			169,631
Other expense, net			(8,079	)
Income tax expense			(53	)
Net income from discontinued operations		$	148,973

Net income attributable to the noncontrolling interest: Net income attributable to the noncontrolling interest increased by $1.0 million to $3.8 million for the nine-month period ended September 30, 2023, as compared to $2.8 million for the same period in 2022. This increase in net income attributable to the noncontrolling interest was mainly due to an increase in net income from Navios Logistics for the nine-month period ended September 30, 2023, as compared to the same period in 2022, which translates into a higher amount allocated to non-controlling interest.

Liquidity and Capital Resources

Navios Holdings has historically financed its capital requirements with cash flows from operations, issuances of debt securities and borrowings under bank credit facilities. Main uses of funds have been refinancing of outstanding debt, capital expenditures for the acquisition of new assets, new construction and upgrades at the port terminals and expenditures incurred in connection with ensuring that the owned assets comply with international and regulatory standards. We may from time to time, subject to restrictions under our debt and equity instruments, including limitations on dividends and repurchases on our preferred

 

9

stock, depending upon market conditions and financing needs, use available funds to refinance or repurchase its debt or equity in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms our management deems appropriate (which may be below par) and subject to our cash requirements for other purposes, compliance with the covenants under our debt agreements, and other factors that our management deems relevant. In addition, Navios Logistics regularly reviews options for refinancing its outstanding indebtedness and opportunities for acquisition of businesses and additional assets, development of new facilities and infrastructure, joint ventures, and other corporate transactions that may be material to it. Generally, sources of funds may be from cash flows from operations, long-term borrowings, other debt or equity financings, proceeds from asset sales, and proceeds from dispositions of our stakes in our investments. We cannot provide any assurance that we will be able to secure adequate financing or obtain additional funds on favorable terms to meet our liquidity needs.

See “Working Capital Position” and “Long-Term Debt Obligations and Credit Arrangements” included elsewhere in this Report for further discussion of our working capital position.

The following table presents cash flow information derived from the unaudited interim condensed consolidated statements of cash flows of Navios Holdings for the nine-month periods ended September 30, 2023 and 2022.

 

		Nine-Month Period Ended September 30, 2023				Nine-Month Period Ended September 30, 2022
(in thousands of U.S. dollars)		(unaudited)				(unaudited)
Net cash provided by operating activities		$	30,965			$	127,441
Net cash (used in)/provided by investing activities			(19,706	)			333,549
Net cash used in financing activities			(28,282	)			(507,767	)
Decrease in cash and cash equivalents and restricted cash			(17,023	)			(46,777	)
Cash and cash equivalents and restricted cash, beginning of period			78,851				137,851
Cash and cash equivalents and restricted cash, end of period		$	61,828			$	91,074

Cash provided by operating activities for the nine-month period ended September 30, 2023, as compared to nine-month period ended September 30, 2022:

Net cash provided by operating activities decreased by $96.5 million to $31.0 million for the nine-month period ended September 30, 2023, as compared to $127.4 million for the nine-month period ended September 30, 2022.

The aggregate adjustments to reconcile net income to net cash provided by operating activities was $9.6 million of non-cash adjustments for the nine-month period ended September 30, 2023, which consisted mainly of the following adjustments: (i) $23.2 million depreciation and amortization; (ii) $4.4 million amortization of deferred drydock expenses; (iii) $3.3 million amortization of deferred financing costs; (iv) $1.7 million impairment loss; (v) $1.0 million income taxes; (vi) $0.4 million allowance for credit losses; and (vii) $0.1 million relating to stock-based compensation. These adjustments were partially mitigated by a $43.6 million movement in earnings in affiliate company, net of dividends received.

The net cash outflow resulting from the change in operating assets and liabilities of $7.5 million for the nine-month period ended September 30, 2023 resulted mainly from: (i) $14.0 million decrease in accrued expenses; (ii) $6.9 million in payments for drydock and special survey costs; (iii) a $6.0 million increase in prepaid expenses and other assets; (iv) a $1.6 million decrease in deferred revenues; (v) a $1.0 million increase in inventories; and (vi) a $0.1 million decrease in other long-term liabilities.. These were partially mitigated by (i) a $14.8 million decrease in accounts receivable, net; (ii) $3.6 million in Convertible Debenture movement, as described elsewhere in this Report; (iii) a $2.3 million increase in accounts payable; (iv) a $1.4 million increase in amounts due to affiliate companies; and (v) a $0.1 million increase in operating lease liabilities.

The aggregate adjustments to reconcile net income to net cash provided by operating activities was $29.0 million of non-cash adjustments for the nine-month period ended September 30, 2022, which consisted mainly of the following adjustments: (i) $61.7 million in prepayment fee incurred in connection with the repayments of the NSM Loan I and NSM Loan II paid via increase of the outstanding principal amount of the Convertible Debenture, as described elsewhere in this Report; (ii) $24.0 million upfront fee in the form of a Convertible Debenture in respect of NSM Loan I and NSM Loan II drawn in January 2022; (iii) $47.7 million movement in earnings in affiliate companies, net of dividends received; (iv) $42.3 million depreciation and amortization; (v) $9.7 million amortization of deferred financing costs; (vi) $8.5 million amortization of deferred drydock expenses; (vii) $3.2 million impairment loss/loss on sale of vessels; (viii) $0.8 million allowance for credit losses; (ix) $0.2 million loss on bond extinguishment, net; (x) $0.2 million income taxes; (xi) $0.1 million relating to unwinding of discount; and (xii) $0.1 million relating to stock-based compensation. These adjustments were partially mitigated by a $169.6 million gain from discontinued operations, following the completion of the Transaction.

 

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The net cash inflow resulting from the change in operating assets and liabilities of $16.8 million for the nine-month period ended September 30, 2022 resulted from: (i) a $33.6 million increase in due to affiliate companies; (ii) $31.9 million in Convertible Debenture movement, as described elsewhere in this Report; (iii) a $7.7 million decrease in prepaid expenses and other assets; and (iv) a $2.5 million decrease in accounts receivable, net. These were partially mitigated by (i) a $34.9 million decrease in accrued expenses; (ii) $9.3 million in payments for drydock and special survey costs; (iii) a $5.6 million decrease in operating lease liabilities; (iv) a $5.0 million decrease in accounts payable; (v) a $0.9 million decrease in accrued interest payable to affiliate companies; (vi) a $2.9 million decrease in deferred revenue; (vii) a $0.2 million increase in inventories; and (vii) a $0.1 million decrease in other long term liabilities.

Cash used in investing activities for the nine-month period ended September 30, 2023 as compared to the cash provided by investing activities for the nine-month period ended September 30, 2022:

Cash used in investing activities was $19.7 million for the nine-month period ended September 30, 2023 as compared to $333.5 million cash provided by investing activities for the same period in 2022.

Cash used in investing activities for the nine-month period ended September 30, 2023 was the result of: (i) $12.8 million in payments made by Navios Logistics for the acquisition of fixed assets; (ii) $6.2 million in payments made by Navios Logistics for expansion works in the Iron Ore Port Terminal; (iii) $2.8 million in payments made by Navios Logistics for the development of a new liquid terminal in Nueva Palmira; (iv) $1.5 million in payments relating to the deposit for the construction of the Twelve Finance Lease Barges (as defined herein); (v) $1.2 million in payments made by Navios Logistics for the acquisition of Vimalcor; and (vi) less than $0.1 million in payments made by Navios Logistics for the development of port operations in Port Murtinho, Brazil. These increases and payments were partially mitigated by the receipt of (i) $4.5 million of proceeds made by Navios Logistics related to the sale of He Man H; (ii) $0.5 million of proceeds made by Navios Logistics related to the disposal of vessels.

Cash provided by investing activities for the nine-months ended September 30, 2022 was the result of $370.6 million in proceeds from the sale of the 36-vessel dry bulk fleet; partially mitigated by (i) $21.4 million in payments made by Navios Holdings for the acquisition of Navios Sky and additions to vessels; (ii) $9.9 million of cash disposed of as a result of the sale of the 36-vessel dry bulk fleet; (iii) $5.5 million in payments for the acquisition of fixed assets made by Navios Logistics, (iv) $0.3 million in payments for the construction of a new stockpile in Navios Logistics’ Iron Ore Port Terminal and (iv) $0.1 million in payments for the development of Navios Logistics’ port operations in Port Murtinho, Brazil.

Cash used in financing activities for the nine-month period ended September 30, 2023 as compared to the nine-month period ended September 30, 2022:

Cash used in financing activities was $28.3 million for the nine-month period ended September 30, 2023, as compared to $507.8 million for the same period in 2022.

Cash used in financing activities for the nine-months ended September 30, 2023 was the result of (i) $18.3 million in payments made in connection with the Company’s outstanding indebtedness; and (ii) $10.0 million payments in relation to the promissory note to Grimaud.

Cash used in financing activities for the nine-months ended September 30, 2022 was the result of (i) $610.5 million in payments made for the repayment of the $650.0 million of 7.375% First Priority Ship Mortgage Notes due 2022 (the “2022 Notes”), completed On November 29, 2013 and the 2022 Senior Secured Notes (as defined herein); (ii) $375.3 million in repayments of loans payable to affiliate companies; (iii) $42.5 million in payments made in connection with Navios Holdings outstanding indebtedness; (iv) $32.0 million in payments made in connection with Navios Logistics’ outstanding indebtedness; (v) $5.0 million in payments made in connection with the promissory note (as defined herein); (vi) $1.6 million in payments of deferred financing costs; and (vii) $0.2 million in payments made in connection with the finance lease liability. These increases were partially mitigated by the receipt of: (i) $262.6 million in proceeds from loans payable to affiliate companies; (ii) $206.7 million in proceeds from long term debt from Navios Holdings; and (iii) $53.0 million in proceeds from three sale and leaseback agreements; (iv) $37.0 million in proceeds from Navios Logistics’ long term debt.

Adjusted EBITDA: EBITDA represents net income attributable to Navios Holdings before interest and finance costs, depreciation and amortization and income taxes. Adjusted EBITDA represents EBITDA before stock-based compensation. Adjusted EBITDA is presented because it is used by certain investors to measure a company’s operating performance and is reconciled to net income/(loss), the most comparable U.S. GAAP performance measure. Adjusted EBITDA is calculated as follows: net income/(loss)

 

11

plus adding back, when applicable and as the case may be, the effect of: (i) depreciation and amortization; (ii) amortization of deferred drydock and special survey costs; (iii) stock-based compensation; (iv) interest expense and finance cost, net; and (v) income tax benefit/(expense). Navios Holdings believes that Adjusted EBITDA is a basis upon which performance can be assessed and represents useful information to investors regarding their ability to incur indebtedness and meet working capital requirements. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective 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.

Adjusted 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) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted 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. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

Adjusted EBITDA Reconciliation to Net Income/(Loss)

 

		Three-Month Period Ended
		September 30, 2023				September 30, 2022
(in thousands of U.S. dollars)		(unaudited)				(unaudited)
Net income/(loss) from continuing operations		$	14,415			$	(70,680	)
Depreciation and amortization			7,502				8,085
Amortization of deferred drydock and special survey costs			1,482				1,189
Stock based compensation			21				44
Interest expense and finance cost, net			16,004				16,169
Income tax benefit			(422	)			(381	)
Adjusted EBITDA		$	39,002			$	(45,574	)

 

		Nine-Month Period Ended
		September 30, 2023				September 30, 2022
(in thousands of U.S. dollars)		(unaudited)				(unaudited)
Net income/(loss) from continuing operations		$	44,360			$	(70,055	)
Depreciation and amortization			23,159				24,157
Amortization of deferred drydock and special survey costs			4,393				3,198
Stock based compensation			64				133
Interest expense and finance cost, net			48,812				72,012
Income tax expense/(benefit)			985				(81	)
Adjusted EBITDA		$	121,773			$	29,364

Adjusted EBITDA from continuing operations for the three-month period ended September 30, 2023 increased by $84.6 million to $39.0 million, as compared to $(45.6) million for the same period in 2022. The increase in Adjusted EBITDA was primarily due to: (i) a $82.9 million increase in equity in net earnings from affiliate companies; (ii) a $4.8 million increase in revenue; (iii) a $3.2 million decrease in impairment losses incurred by Navios Logistics during the three-month period ended September 30, 2022; and (iv) a $1.3 million increase in other income, net. This overall increase was partially mitigated by: (i) a $3.9 million increase in time charter, voyage and logistics business expenses; (ii) a $2.3 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (iii) a $1.2 million increase in net income attributable to noncontrolling interest; and (iv) a $0.2 million increase in general and administrative expenses (excluding stock-based compensation expenses).

 

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Adjusted EBITDA from continuing operations for the nine-month period ended September 30, 2023 increased by $92.4 million to $121.8 million, as compared to $29.4 million for the same period in 2022. The increase in Adjusted EBITDA was primarily due to: (i) a $91.3 million increase in equity in net earnings from affiliate companies; (ii) a $23.8 million increase in revenue; and (iii) a $1.5 million decrease in impairment loss incurred. This overall increase was partially mitigated by: (i) a $10.5 million increase in time charter, voyage and logistics business expenses; (ii) a $5.7 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (iii) a $3.9 million increase in general and administrative expenses (excluding stock-based compensation expenses); (iv) a $3.1 million increase in other expenses, net; and (v) a $1.0 million decrease in net income attributable to noncontrolling interest.

Long-Term Debt Obligations and Credit Arrangements

Navios Holdings’ long-term debt obligations and credit arrangements are presented under the captions “Current portion of long-term debt, net”, “Current portion of senior and ship mortgage notes, net”, “Senior and ship mortgage notes, net”, “Long-term debt, net of current portion” and “Convertible debenture payable to affiliate companies”, under current and non-current liabilities in the consolidated statement of financial position, included elsewhere in this Report. As of September 30, 2023 and December 31, 2022, total borrowings, net amounted to $631.8 million and $651.2 million, respectively. The current portion of long-term borrowings, net amounted to $31.5 million at September 30, 2023 and $23.5 million at December 31, 2022. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2022 for a full description of borrowings.

Working Capital Position

As of September 30, 2023, Navios Holdings’ current assets totaled $122.2 million, while current liabilities excluding operating lease liabilities, current portion totaled $99.5 million, resulting in a positive working capital position of $22.7 million.

Based on internal forecasts and projections that take into account potential changes in the Company’s trading performance and other assets, management believes that the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of the interim condensed consolidated financial statements. Although internal forecasts and projections are driven by market data and are subject to future volatility along with other factors outside the control of the Company, with the existence of alternative liquidity sources and management’s ability to utilize them if needed, management concludes that the Company has the ability to continue as a going concern as of the date of the issuance of the interim condensed consolidated financial statements.

Capital Expenditures

Navios Logistics

For a full description of Navios Logistics’ capital expenditures, please see Note 4 “Vessels, port terminals and other fixed assets, net” to our unaudited condensed consolidated financial statements included elsewhere in this Report.

Dividend Policy

In November 2015, Navios Holdings announced that the Board of Directors decided to suspend the quarterly dividend to its common stockholders. In February 2016, Navios Holdings announced the suspension of payment of quarterly dividends on its preferred stock, including the Series G ADSs and Series H ADSs. The reinstatement, declaration and payment of any further dividend remains subject to the discretion of the Board of Directors and will depend on, among other things, market conditions, Navios Holdings’ cash requirements after taking into account market opportunities, restrictions under its equity instruments, credit agreements, indentures and other debt obligations and such other factors as the Board of Directors may deem advisable.

No dividends were declared or paid during the three- and nine-month periods ended September 30, 2023 and 2022.

Concentration of Credit Risk

Accounts receivable, net

Concentration of credit risk with respect to accounts receivables is limited due to Navios Holdings’ large number of customers, who are internationally dispersed and have a variety of end markets in which they operate. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in Navios Holdings’ trade receivables. For the nine-month period ended September 30, 2023, Vale International S.A. (“Vale”) and Y.P.F. S.A. (“YPF”), each, accounted for more than 10.0% of the Company’s revenue. For the nine-month period ended September 30, 2022, Vale and YPF, each, accounted for more than 10.0% of the Company’s revenue.

 

13

In July 2022, Vale S.A. announced the closing of the sale of its iron ore, manganese ore and logistics assets in the midwestern system to J&F Mineracao Ltda., an entity controlled by J&F Investimentos S.A. The Vale port contract entered into between Corporacion Navios S.A., a company controlled by Navios Logistics, and Vale, dated September 27, 2013, remains in full force and effect.

Cash deposits with financial institutions

Cash deposits in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Holdings maintains cash deposits in excess of government-provided insurance limits. Navios Holdings also reduces exposure to credit risk by dealing with a diversified group of major financial institutions.

Effects of Inflation

Navios Holdings does not consider inflation to be a significant risk to the cost of doing business in the foreseeable future. The Company considered various factors in assessing the impact of Argentina’s highly inflationary economy on Navios Logistics, including sales, financing arrangements, working capital, employee salaries, and taxes. The functional currency of the Company’s Argentinian subsidiary is the U.S. dollar and the day-to-day operations of the Company’s Argentinian subsidiary are dependent on the economic environment of the Company’s U.S. dollar currency. As a result, the Company concluded that the highly inflationary economic environment in Argentina would not have a material impact on Navios Logistics’ financial statements and as such, determined not to issue a restatement.

Related Party Transactions

Please see Note 9 “Transactions with Related Parties” to our unaudited interim condensed consolidated financial statements, included elsewhere in this Report, for a full description of related party transactions.

Quantitative and Qualitative Disclosures about Market Risks

Navios Holdings is exposed to certain risks related to interest rate, foreign currency and fuel price inflation rates .

Interest Rate Risk

Debt Instruments — On September 30, 2023 and December 31, 2022, Navios Holdings had a total of $672.1 million and $686.8 million, respectively, of long-term indebtedness. All of the Company’s debt is U.S. dollar-denominated. The 2024 Notes, the Convertible Debenture, the 2025 Logistics Senior Notes and four Navios Logistics’ loans bear interest at a fixed rate; the remaining balance of the Company’s long- term indebtedness bears interest at a floating rate.

Changes in interest rates for our floating-rate loan facilities would affect their interest rate and related interest expense. As of September 30, 2023, the outstanding amount of the Company’s floating rate loan facilities was $9.5 million. A change of 100 basis points in the SOFR rate would change interest expense for the nine-month period ended September 30, 2023 by $0.1 million. The interest rate on the 2024 Notes, the Convertible Debenture, the 2025 Logistics Senior Notes and four of Navios Logistics’ loans are fixed and, therefore, changes in interest rates affect their fair value, which as of September 30, 2023 was $662.6 million, but do not affect their related interest expense.

For a detailed discussion of Navios Holdings’ debt instruments refer to the section “Long-Term Debt Obligations and Credit Arrangements” to the interim condensed consolidated financial statements included elsewhere in this Report.

Foreign Currency Risk

Our operating results, which are reported in U.S. dollars, may be affected by fluctuations in the exchange rate between the U.S. dollar and other South American currencies. We use the U.S. dollar as our functional and reporting currency. Therefore, revenue and expense accounts are translated into U.S. dollars at the exchange rate in effect at the date of each transaction.

Although Navios Holdings’ revenues are U.S. dollar-based, 51.2% of our expenses from continuing operations related to the Navios Logistics segment are in Uruguayan pesos, Argentinean pesos, Paraguayan guaranies and Brazilian reals. Navios Holdings monitors its Argentine peso, Uruguayan peso, Paraguayan guarani and Brazilian real exposure against long-term currency forecasts and enters into foreign currency contracts from time to time when considered appropriate.

 

14

Inflation and Fuel Price Increases

The impact of inflation on prices in the South American countries in which Navios Logistics operates and the effects of the current war in Ukraine and the Gaza strip may not be fully neutralized by equivalent adjustments in the rate of exchange between the local currencies and the U.S. dollar. Specifically, for its Barge and Cabotage Businesses, Navios Logistics negotiated, and will continue to negotiate, fuel price adjustment clauses; however, in some cases, prices that Navios Logistics pays for fuel are temporarily not aligned with the adjustments that Navios Logistics obtains under its freight contracts.

Critical Accounting Policies

Navios Holdings’ unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires Navios Holdings to make estimates in the application of its accounting policies based on the best assumptions, judgments and opinions of management. Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. All significant accounting policies are as described in the Company’s Annual Report on Form 20-F for the year ended December 31, 2022.

During the second quarter of 2023, the Company changed its accounting policy on foreign exchange differences recognized in the unaudited condensed consolidated statements of comprehensive income. Following this change, foreign exchange gains and losses are presented in the same line item as the underlying transaction. Total impact for the nine-month periods ended September 30, 2023 and 2022 was $1.4 million and $0.5 million respectively. The impact of the amounts reclassified to each underlying item was not material for all prior periods presented.

Asset Acquisitions: When the Company enters into an acquisition transaction, it determines whether the acquisition transaction is a purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Topic 805, Business Combinations, the Company first evaluates whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (Step 1). If that threshold is met, the set of assets and activities is not a business. If the threshold is not met, the Company evaluates whether the set meets the definition of a business (Step 2). To be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their fair values on the acquisition date. For asset acquisitions, the net assets acquired should be measured following a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the qualifying assets acquired. In May 2023, Navios Logistics completed the acquisition of the stock of Vimalcor S.A. (“Vimalcor”) for a purchase price of $1.6 million. This was classified as an asset acquisition; the main asset acquired is the right of use of a plot of land in the port of Montevideo (refer to Note 5 and Note 14).

Investments in Equity Securities

Navios Holdings evaluates its investments in Navios Partners on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than the carrying value, (ii) the financial condition and near-term prospects of such companies, and (iii) the intent and ability of the Company to retain its investment in the companies for a period of time sufficient to allow for any anticipated recovery in fair value. See also Note 13 “Investments in Affiliate Companies and Investments in Available-For-Sale Securities” to the interim condensed consolidated financial statements included elsewhere in this Report.

Recent Accounting Pronouncements

The Company’s recent accounting pronouncements are included in the accompanying notes to the unaudited interim condensed consolidated financial statements included elsewhere in this Report.

 

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NAVIOS MARITIME HOLDINGS INC.

 

Index		Page
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER  30, 2023 AND DECEMBER 31, 2022			F-2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022			F-3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022			F-4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30, 2023 AND 2022			F-5
UNAUDITED CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			F-6

 

NAVIOS MARITIME HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. dollars — except share data)

 

		Notes				September 30, 2023 (unaudited)				December 31, 2022 (unaudited)
ASSETS
Current assets
Cash and cash equivalents			3, 7			$	58,086			$	78,541
Restricted cash			3, 7, 8				3,742				310
Accounts receivable, net							34,668				46,494
Inventories							11,460				10,468
Prepaid expenses and other current assets							14,266				8,268
Total current assets, continuing operations							122,222				144,081
Current assets from discontinued operations			15				—				3,489
Total current assets							122,222				147,570
Vessels, port terminals and other fixed assets, net			4				486,664				495,919
Investments in affiliate companies			9, 13				142,867				99,292
Other long-term assets			4				30,200				19,454
Operating lease assets			14				19,913				11,787
Intangible assets other than goodwill			5				45,351				46,193
Goodwill							104,096				104,096
Total non-current assets							829,091				776,741
Total assets						$	951,313			$	924,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable						$	30,769			$	21,638
Accrued expenses and other liabilities							29,633				39,852
Deferred income and cash received in advance							3,944				4,271
Operating lease liabilities, current portion			14				2,603				834
Due to affiliate companies			9				3,610				1,642
Current portion of long-term debt, net			6, 7				22,921				23,544
Current portion of promissory note			9				—				10,000
Current portion of senior and ship mortgage notes, net			6, 7				8,626				—
Total current liabilities, continuing operations							102,106				101,781
Current liabilities from discontinued operations			15				—				6,082
Total current liabilities							102,106				107,863
Senior and ship mortgage notes, net of current portion			6, 7				491,231				496,608
Long-term debt, net of current portion			6, 7				18,105				35,769
Convertible debenture payable to affiliate companies			6, 7, 9				122,424				118,833
Deferred voyage revenue, non-current portion							—				1,313
Other long-term liabilities and deferred income							818				927
Operating lease liabilities, net of current portion			14				17,312				10,953
Deferred tax liability							9,038				9,954
Total non-current liabilities							658,928				674,357
Total liabilities							761,034				782,220
Commitments and contingencies			8				—				—
Stockholders’ equity
Preferred stock — $0.0001 par value, authorized 1,000,000 shares, 16,988 issued and outstanding as of both September 30, 2023 and December 31, 2022, respectively.			10				—				—
Common stock — $0.0001 par value, authorized 250,000,000 shares, 22,826,450 issued and outstanding as of both September 30, 2023 and December 31, 2022, respectively.			10				2				2
Additional paid-in capital							664,996				664,932
Accumulated deficit							(531,693	)			(576,053	)
Total Navios Holdings stockholders’ equity							133,305				88,881
Noncontrolling interest							56,974				53,210
Total stockholders’ equity							190,279				142,091
Total liabilities and stockholders’ equity						$	951,313			$	924,311

See unaudited condensed notes to condensed consolidated financial statements

 

F-2

NAVIOS MARITIME HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of U.S. dollars — except share and per share data)

 

		Notes				Three Month Period Ended September 30, 2023				Three Month Period Ended September 30, 2022				Nine Month Period Ended September 30, 2023				Nine Month Period Ended September 30, 2022
						(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenue						$	79,238			$	74,437			$	226,549			$	202,776
Time charter, voyage and logistics business expenses							(24,225	)			(20,313	)			(63,993	)			(53,459	)
Direct vessel expenses							(23,685	)			(21,125	)			(63,510	)			(56,655	)
General and administrative expenses			9				(4,857	)			(4,636	)			(17,220	)			(13,430	)
Depreciation and amortization			4, 5				(7,502	)			(8,085	)			(23,159	)			(24,157	)
Interest expense and finance cost, net							(16,004	)			(16,169	)			(48,812	)			(48,012	)
Impairment loss/loss on sale of vessel			4				—				(3,195	)			(1,651	)			(3,195	)
Non-operating other finance cost			6,9				—				—				—				(24,000	)
Other income/(expense), net			11				91				(1,205	)			(3,147	)			(3	)
Income/(loss) before equity in net earnings/(losses) of affiliate companies							3,056				(291	)			5,057				(20,135	)
Equity in net earnings/(losses) of affiliate companies			9, 13				12,755				(70,173	)			44,052				(47,214	)
Income/(loss) before taxes						$	15,811			$	(70,464	)		$	49,109			$	(67,349	)
Income tax benefit/(expense)							422				381				(985	)			81
Net income/(loss) from continuing operations						$	16,233			$	(70,083	)		$	48,124			$	(67,268	)
Net income from discontinued operations			15			$	—			$	109,638			$	—			$	148,973
Net income						$	16,233			$	39,555			$	48,124			$	81,705
Less: Net income attributable to the noncontrolling interest							(1,818	)			(597	)			(3,764	)			(2,787	)
Net income attributable to Navios Holdings						$	14,415			$	38,958			$	44,360			$	78,918
Net income attributable to Navios Holdings from continuing and discontinued operations:
Income/(loss) attributable to Navios Holdings from continuing operations						$	14,415			$	(70,680	)		$	44,360			$	(70,055	)
Income attributable to Navios Holdings from discontinued operations						$	—			$	109,638			$	—			$	148,973
Income attributable to Navios Holdings common stockholders, basic and diluted			12			$	5,716			$	20,877			$	17,733			$	50,381
Basic earnings/(losses) per share attributable to Navios Holdings common stockholders from continuing operations						$	0.25			$	(3.92	)		$	0.78			$	(4.35	)
Basic earnings per share attributable to Navios Holdings common stockholders from discontinued operations						$	—			$	4.84			$	—			$	6.58
Basic earnings per share attributable to Navios Holdings common stockholders						$	0.25			$	0.92			$	0.78			$	2.22
Weighted average number of shares, basic			12				22,744,450				22,654,825				22,744,450				22,647,128
Diluted earnings/(losses) per share attributable to Navios Holdings common stockholders from continuing operations						$	0.25			$	(3.92	)		$	0.78			$	(4.35	)
Diluted earnings per share attributable to Navios Holdings common stockholders from discontinued operations						$	—			$	4.84			$	—			$	6.56
Diluted earnings per share attributable to Navios Holdings common stockholders						$	0.25			$	0.91			$	0.78			$	2.21
Weighted average number of shares, diluted			12				22,826,450				22,847,917				22,826,450				22,845,992

See unaudited condensed notes to condensed consolidated financial statements

 

F-3

NAVIOS MARITIME HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. dollars)

 

		Notes				Nine Month Period Ended September 30, 2023				Nine Month Period Ended September 30, 2022
						(unaudited)				(unaudited)
OPERATING ACTIVITIES:
Net income						$	48,124			$	81,705
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash adjustments							(9,637	)			28,988
Decrease in operating assets							10,151				10,320
(Decrease)/increase in operating liabilities							(10,779	)			15,772
Payments for drydock and special survey costs							(6,894	)			(9,344	)
Net cash provided by operating activities							30,965				127,441
INVESTING ACTIVITIES:
Acquisition of/additions to vessels							—				(21,357	)
Acquisition of Vimalcor							(1,224	)			—
Deposits for vessels, port terminals and other fixed assets acquisitions			4				(10,693	)			(361	)
Proceeds from the Transaction							—				370,638
Cash disposed of due to the Transaction							—				(9,862	)
Proceeds from sale of assets			4				5,001				—
Purchase of property, equipment and other fixed assets			4				(12,790	)			(5,509	)
Net cash (used in)/provided by investing activities							(19,706	)			333,549
FINANCING ACTIVITIES:
Repayment of long-term debt and payment of principal			6				(18,282	)			(74,520	)
Repayment/repurchase of senior notes			6				—				(610,466	)
Repayment of loan payable to affiliate companies			6				—				(375,264	)
Proceeds from loan payable to affiliate companies, net of deferred financing costs			6				—				262,632
Proceeds from long-term loans, net of deferred financing costs			6				—				296,725
Debt issuance costs							—				(1,645	)
Repayment of finance lease liability							—				(229	)
Acquisition of noncontrolling interest			9				(10,000	)			(5,000	)
Net cash used in financing activities							(28,282	)			(507,767	)
Decrease in cash and cash equivalents and restricted cash							(17,023	)			(46,777	)
Cash and cash equivalents and restricted cash, beginning of period							78,851				137,851
Cash and cash equivalents and restricted cash, end of period			3			$	61,828			$	91,074
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest						$	56,674			$	100,625
Cash paid for income taxes						$	—			$	61
Non-cash investing and financing activities
Acquisition of Vimalcor						$	(200	)		$	—
Transfers from deposits for vessels, port terminals and other fixed assets			4			$	1,907			$	—
Purchase of property, equipment and other fixed assets			4			$	(2,263	)		$	—
Other long-term assets						$	(177	)		$	—
Discontinued operations
Net cash provided by operating activities of discontinued operations						$	—			$	103,188
Net cash provided by investing activities of discontinued operations						$	—			$	339,419

See unaudited condensed notes to condensed consolidated financial statements

 

F-4

NAVIOS MARITIME HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of U.S. dollars — except share data)

 

		Number of Preferred Shares				Preferred Stock				Number of Common Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total Navios Holdings’ Stockholders’ Equity				Noncontrolling Interest				Total Equity
Balance December 31, 2022			16,988			$	—				22,826,450			$	2			$	664,932			$	(576,053	)		$	88,881			$	53,210			$	142,091
Net income			—				—				—				—				—				14,465				14,465				408				14,873
Stock-based compensation expenses (Note 10)			—				—				—				—				22				—				22				—				22
Balance March 31, 2023 (unaudited)			16,988			$	—				22,826,450			$	2			$	664,954			$	(561,588	)		$	103,368			$	53,618			$	156,986
Net income			—				—				—				—				—				15,480				15,480				1,538				17,018
Stock-based compensation expenses (Note 10)			—				—				—				—				21				—				21				—				21
Balance June 30, 2023 (unaudited)			16,988			$	—				22,826,450			$	2			$	664,975			$	(546,108	)		$	118,869			$	55,156			$	174,025
Net income			—				—				—				—				—				14,415				14,415				1,818				16,233
Stock-based compensation expenses (Note 10)			—				—				—				—				21				—				21				—				21
Balance September 30, 2023 (unaudited)			16,988			$	—				22,826,450			$	2			$	644,996			$	(531,693	)		$	133,305			$	56,974			$	190,279

 

		Number of Preferred Shares				Preferred Stock				Number of Common Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total Navios Holdings’ Stockholders’ Equity				Noncontrolling Interest				Total Equity
Balance December 31, 2021			23,032			$	—				25,198,620			$	2			$	679,301			$	(667,906	)		$	11,397			$	55,247			$	66,644
Net loss			—				—				—				—				—				(5,000	)			(5,000	)			(128	)			(5,128	)
Cancellation of shares			—				—				(29	)			—				—				—				—				—				—
Issuance of preferred stock (Note 10)			1,000				—				—				—				—				—				—				—				—
Stock-based compensation expenses (Note 10)			—				—				40,000				—				46				—				46				—				46
Balance March 31, 2022 (unaudited)			24,032			$	—				25,238,591			$	2			$	679,347			$	(672,906	)		$	6,443			$	55,119			$	61,562
Net income			—				—				—				—				—				44,960				44,960				2,318				47,278
Stock-based compensation expenses (Note 10)			—				—				—				—				44				—				44				—				44
Balance June 30, 2022 (unaudited)			24,032			$	—				25,238,591			$	2			$	679,391			$	(627,946	)		$	51,447			$	57,437			$	108,884
Net income			—				—				—				—				—				38,958				38,958				597				39,555
Cancellation of shares			—				—				(37,878	)			—				—				—				—				—				—
Stock-based compensation expenses (Note 10)			—				—				—				—				43				—				43				—				43
Balance September 30, 2022 (unaudited)			24,032			$	—				25,200,713			$	2			$	679,434			$	(588,988	)		$	90,448			$	58,034			$	148,482

See unaudited condensed notes to condensed consolidated financial statements

 

F-5