UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
DATED: August 31, 2023
Commission File No.
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
NAVIOS MARITIME PARTNERS L.P.
FORM 6-K
TABLE OF CONTENTS
Page | |
Operating and Financial Review and Prospects | 2 |
Exhibit List | 22 |
INDEX | F-1 |
This Report on Form 6-K is hereby incorporated by reference into the Navios Maritime Partners L.P. Registration Statement on Form F-3, File No. 333-271842.
Operating and Financial Review and Prospects
The following is a discussion of the financial condition and results of operations for the three and six month periods ended June 30, 2023 and 2022 of Navios Maritime Partners L.P. (referred to herein as “we”, “us”, “Company” or “Navios Partners”). All of the financial statements have been stated 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 Partners’ 2022 Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”) on March 24, 2023.
This Report contains and will contain forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events, TCE rates (as defined herein), and Navios Partners’ expected cash flow generation, future contracted revenues, future distributions and its ability to make distributions going forward, opportunities to reinvest cash accretively in a fleet renewal program or otherwise, potential capital gains, its ability to take advantage of dislocation in the market and Navios Partners’ growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters and Navios Partners’ ability to refinance its debt on attractive terms, or at all. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Navios Partners at the time these statements were made. Although Navios Partners believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Partners. Actual results may differ materially from those expressed or implied by such forward-looking statements. 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 including global economic activity, demand for seaborne transportation of the products we ship, the ability and willingness of charterers to fulfill their obligations to us and prevailing charter rates, the economic condition of the markets in which we operate, shipyards performing scrubber installations, construction of newbuilding vessels, drydocking and repairs, changing vessel crews and availability of financing, potential disruption of shipping routes due to accidents, wars, sanctions, diseases, pandemics, political events, piracy or acts by terrorists; uncertainty relating to global trade, including prices of seaborne commodities and continuing issues related to seaborne volume and ton miles, our continued ability to enter into long- term time charters, our ability to maximize the use of our vessels, expected demand in the dry and liquid cargo shipping sectors in general and the demand for our drybulk, containerships and tanker vessels in particular, fluctuations in charter rates for drybulk, containerships and tanker vessels, the aging of our fleet and resultant increases in operations costs, the loss of any customer or charter or vessel, the financial condition of our customers, changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors, fluctuation in interest rates and foreign exchange rates, and the impact of the discontinuance of the London Interbank Offered Rate for US Dollars, or LIBOR, after June 30, 2023, increases in costs and expenses, including but not limited to: crew, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses, the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business, general domestic and international political conditions, competitive factors in the market in which Navios Partners operates; risks associated with operations outside the United States; and other factors listed from time to time in Navios Partners’ filings with the SEC, including its Form 20-F and Form 6-K. Navios Partners expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Partners’ expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Partners makes no prediction or statement about the performance of its common units.
Recent Developments
In August 2023, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel is being bareboat-in for ten years. Navios Partners has the option to acquire the vessels starting at the end of year four until the end of the charter period. Assuming the exercise of the option at the end of the 10-year period, the bareboat agreements reflect an implied price of approximately $41.5 million per vessel and an implied effective interest rate of approximately 7.0%. The vessels are expected to be delivered into Navios Partners’ fleet during the first half of 2027. The closing of the transaction is subject to completion of customary documentation.
In August 2023, Navios Partners agreed to acquire from an unrelated third party, the Navios Horizon I, a 2019-built Kamsarmax vessel of 81,692 dwt (previously chartered-in) for an acquisition price of $28.0 million. The delivery of the vessel is expected within the third quarter of 2023.
During the second quarter of 2023, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel is being bareboat-in for ten years. Navios Partners has the option to acquire the vessels starting at the end of year four until the end of the charter period. Assuming the exercise of the option at the end of the 10-year period, the bareboat agreements reflect an implied price of approximately $40.2 million per vessel and an implied effective interest rate of approximately 7.0%. The vessels are expected to be delivered into Navios Partners’ fleet during the second half of 2026 and the first half of 2027. The closing of the transaction is subject to completion of customary documentation.
On May 10, 2023, Navios Partners agreed to sell the Lumen N, a 2008-built LR1 vessel of 63,599 dwt, to an unrelated third party, for a net sales price of $21.6 million. The sale was completed on July 7, 2023.
Overview
We are an international owner and operator of dry cargo and tanker vessels, formed on August 7, 2007 under the laws of the Republic of the Marshall Islands. Olympos Maritime Ltd. is our general partner (the “General Partner”).
As of August 25, 2023, there were 30,184,388 outstanding common units and 622,296 general partnership units. Navios Maritime Holdings Inc. (“Navios Holdings”) currently owns an approximately 10.3% ownership interest in Navios Partners and the General Partner currently owns an approximately 2.0% ownership interest in Navios Partners based on all outstanding common units and general partnership units.
Fleet
Navios Partners’ fleet consists of 81 drybulk vessels, 47 containerships and 49 tanker vessels, including 12 newbuilding tanker vessels (six Aframax/LR2 and six MR2 Product Tanker chartered-in vessels under bareboat contracts), that are expected to be delivered through 2027 and 12 newbuilding containerships (ten 5,300 TEU and two 7,700 TEU), that are expected to be delivered through 2025.
We generate revenues by charging our customers for the use of our vessels to transport their dry cargo commodities, containers, crude oil and/or refined petroleum products. In general, the vessels in our fleet are chartered-out under time charters, which range in length from one to twelve years at inception. From time to time, we operate vessels in the spot market until the vessels have been chartered out under short-term, medium and long-term charters.
The following table provides summary information about our fleet as of August 25, 2023:
Owned Drybulk Vessels | Type | Built | Capacity | Charter-Out | Index(2) | Expiration | ||||||
(DWT) | Rate(1) | Date(3) | ||||||||||
Navios Christine B | Ultra-Handymax | 2009 | 58,058 | — | 100.0% average BSI 58 10TC | Oct-23 | ||||||
Navios Celestial | Ultra-Handymax | 2009 | 58,063 | $ | 11,400 | No | Sep-23 | |||||
— | 100% average BSI 58 10TC | May-25 | ||||||||||
Navios Vega | Ultra-Handymax | 2009 | 58,792 | — | Scheduled repairs | — | ||||||
Navios La Paix | Ultra-Handymax | 2014 | 61,485 | — | 111.0% average BSI 58 10TC | Jul-24 | ||||||
Navios Hyperion | Panamax | 2004 | 75,707 | $ | 19,000 | No | Nov-23 | |||||
Navios Orbiter | Panamax | 2004 | 76,602 | — | 100.0% average BPI 4TC | Dec-23 | ||||||
Navios Hope | Panamax | 2005 | 75,397 | — | 100.0% average BPI 4TC | Sep-23 | ||||||
$ | 11,550 | No | Dec-23 | |||||||||
— | 100.0% average BPI 4TC | Jun-24 | ||||||||||
Navios Taurus | Panamax | 2005 | 76,596 | — | 100.0% average BPI 4TC | Sep-23 | ||||||
$ | 11,887 | No | Dec-23 | |||||||||
— | 100.0% average BPI 4TC | Mar-24 | ||||||||||
Navios Sun | Panamax | 2005 | 76,619 | $ | 16,844 | No | Sep-23 | |||||
— | 100.0% average BPI 4TC | Dec-23 | ||||||||||
Navios Asteriks(24) | Panamax | 2005 | 76,801 | — | 100.0% average BPI 4TC | Sep-23 | ||||||
Navios Helios | Panamax | 2005 | 77,075 | — | 100.0% average BPI 4TC | Sep-23 | ||||||
$ | 11,694 | No | Dec-23 | |||||||||
— | 100.0% average BPI 4TC | Jan-24 | ||||||||||
Navios Apollon I | Panamax | 2005 | 87,052 | — | 105.0% average BPI 4TC | Sep-23 | ||||||
N Amalthia | Panamax | 2006 | 75,318 | — | 90.0% average BPI 82 | Sep-23 | ||||||
$ | 12,332 | No | Dec-23 | |||||||||
— | 90.0% average BPI 82 | Apr-24 | ||||||||||
Navios Sagittarius(5) | Panamax | 2006 | 75,756 | — | 100.0% average BPI 4TC | Nov-23 | ||||||
Navios Galileo | Panamax | 2006 | 76,596 | — | 89.0% average BPI 82 | Jan-24 | ||||||
N Bonanza | Panamax | 2006 | 76,596 | $ | 16,363 | No | Sep-23 | |||||
$ | 11,935 | No | Dec-23 | |||||||||
— | 100.0% average BPI 4TC | Apr-24 | ||||||||||
Navios Harmony | Panamax | 2006 | 82,790 | $ | 9,025 | No | Nov-23 | |||||
Copernicus N | Panamax | 2010 | 93,062 | — | 107.0% average BPI 4TC | Sep-23 | ||||||
Unity N | Panamax | 2011 | 79,642 | — | 100.0% average BPI 4TC | Dec-23 | ||||||
Odysseus N | Panamax | 2011 | 79,642 | — | 100.0% average BPI 4TC | Nov-23 | ||||||
Rainbow N | Panamax | 2011 | 79,642 | — | 100.0% average BPI 4TC | Nov-23 | ||||||
Navios Avior | Panamax | 2012 | 81,355 | — | 100.0% average BPI 82 | Sep-23 | ||||||
$ | 12,954 | No | Dec-23 | |||||||||
— | 100.0% average BPI 82 | Feb-24 |
Navios Centaurus | Panamax | 2012 | 81,472 | — | 101.0% average BPI 82 | Sep-23 | ||||||
$ | 13,084 | No | Dec-23 | |||||||||
— | 101.0% average BPI 82 | Jul-24 | ||||||||||
Navios Victory | Panamax | 2014 | 77,095 | — | 106.75% average BPI 4TC | Oct-23 | ||||||
Navios Alegria(24) | Panamax | 2016 | 84,852 | $ | 14,197 | No | Jul-24 | |||||
Navios Sphera | Panamax | 2016 | 84,872 | — | 108% of average BPI 82 | Sep-23 | ||||||
$ | 13,343 | No | Dec-23 | |||||||||
$ | 11,628 | No | Mar-24 | |||||||||
— | 108% of average BPI 82 | Apr-24 | ||||||||||
Navios Sky(5) | Panamax | 2015 | 82,056 | — | 105.0 % average BPI 82 | Sep-23 | ||||||
$ | 13,073 | No | Dec-23 | |||||||||
— | 105.0 % average BPI 82 | Sep-24 | ||||||||||
Navios Uranus(6) | Panamax | 2019 | 81,821 | $ | 15,593 | No | Dec-23 | |||||
Navios Herakles I(6) | Panamax | 2019 | 82,036 | — | 115.0% average BPI 82 | Sep-23 | ||||||
$ | 13,696 | No | Oct-23 | |||||||||
$ | 13,517 | No | Dec-23 | |||||||||
$ | 11,684 | No | Mar-24 | |||||||||
$ | 13,733 | No | Jun-24 | |||||||||
— | 113.5% average BPI 82 | Jul-24 | ||||||||||
Navios Galaxy II(6) | Panamax | 2020 | 81,789 | $ | 14,520 | No | Sep-23 | |||||
$ | 13,184 | No | Dec-23 | |||||||||
— | 112.5% average BPI 82 | Mar-24 | ||||||||||
$ | 13,612 | No | Jun-24 | |||||||||
— | 112.5% average BPI 82 | Dec-24 | ||||||||||
Navios Felicity I(6) | Panamax | 2020 | 81,962 | $ | 14,919 | No | Dec-23 | |||||
Navios Magellan II(6) | Panamax | 2020 | 82,037 | $ | 13,837 | No | Sep-23 | |||||
$ | 13,298 | No | Dec-23 | |||||||||
— | 112.0% average BPI 82 | Feb-24 | ||||||||||
Navios Primavera(5) | Panamax | 2022 | 82,003 | — | 112.0% average BPI 82 | Sep-23 | ||||||
— | 115.0% average BPI 82 | Sep-24 | ||||||||||
Navios Meridian(5) | Panamax | 2023 | 82,010 | $ | 13,975 | No | Sep-23 | |||||
$ | 13,426 | No | Dec-23 | |||||||||
— | 115.5% average BPI 82 | Jan-24 | ||||||||||
Navios Beaufiks(5) | Capesize | 2004 | 180,310 | $ | 22,563 | No | Sep-23 | |||||
Navios Fantastiks(5) | Capesize | 2005 | 180,265 | $ | 18,911 | No | Dec-23 | |||||
Navios Stellar(5) | Capesize | 2009 | 169,001 | — | 99.0% average BCI 5TC | Apr-24 | ||||||
Navios Aurora II | Capesize | 2009 | 169,031 | — | 99.0% average BCI 5TC | May-24 | ||||||
Navios Happiness | Capesize | 2009 | 180,022 | $ | 20,710 | No | Dec-23 | |||||
Navios Bonavis(5) | Capesize | 2009 | 180,022 | — | 107.0% average BCI 5TC | Apr-24 | ||||||
Navios Phoenix(5) | Capesize | 2009 | 180,242 | — | 100.0% average BCI 5TC + $1,905 per day | Jan-24 | ||||||
Navios Sol(5) | Capesize | 2009 | 180,274 | $ | 20,378 | No | Dec-23 | |||||
— | 110.0% average BCI 5TC | Apr-24 | ||||||||||
Navios Lumen(5) | Capesize | 2009 | 180,661 | — | 107.0% average BCI 5TC | Apr-24 | ||||||
Navios Pollux(5) | Capesize | 2009 | 180,727 | — | 100.0% of pool earnings | Oct-23 | ||||||
Navios Antares(5) | Capesize | 2010 | 169,059 | — | 100.0% average BCI 5TC | Jan-24 | ||||||
Navios Symphony | Capesize | 2010 | 178,132 | — | 104.5% average BCI 5TC | Jan-24 | ||||||
Navios Melodia | Capesize | 2010 | 179,132 | — | 105.0% average BCI 5TC | Apr-24 | ||||||
Navios Luz | Capesize | 2010 | 179,144 | — | 106.0% average BCI 5TC | May-24 | ||||||
Navios Etoile | Capesize | 2010 | 179,234 | — | 105.0% average BCI 5TC | Feb-24 | ||||||
Navios Buena Ventura | Capesize | 2010 | 179,259 | — | 105.0% average BCI 5TC | Feb-24 | ||||||
Navios Bonheur | Capesize | 2010 | 179,259 | — | 103.0% average BCI 5TC | Dec-23 | ||||||
Navios Fulvia | Capesize | 2010 | 179,263 | — | 105.0% average BCI 5TC | Feb-24 | ||||||
Navios Aster | Capesize | 2010 | 179,314 | $ | 22,721 | No | Sep-23 | |||||
— | 108.0% average BCI 5TC | Dec-23 | ||||||||||
Navios Ace(5) | Capesize | 2011 | 179,016 | — | 107.25% average BCI 5TC | Mar-24 | ||||||
Navios Altamira | Capesize | 2011 | 179,165 | — | 107.0% average BCI 5TC | Mar-24 | ||||||
Navios Azimuth | Capesize | 2011 | 179,169 | — | 105.0% average BCI 5TC | Feb-24 | ||||||
Navios Koyo | Capesize | 2011 | 181,415 | — | 118.0% average BCI 5TC | Sep-23 | ||||||
$ | 19,057 | No | Dec-23 | |||||||||
— | 118.0% average BCI 5TC | Apr-24 |
Navios Ray(5) | Capesize | 2012 | 179,515 | $ | 19,950 | No | Dec-23 | |||||
— | 105.0% average BCI 5TC | Feb-24 | ||||||||||
Navios Joy | Capesize | 2013 | 181,389 | — | Freight Voyages | Aug-25 | ||||||
Navios Gem | Capesize | 2014 | 181,336 | — | 128.0% average BCI 5TC | Jan-24 | ||||||
Navios Canary(24) | Capesize | 2015 | 180,528 | $ | 24,819 | No | Dec-23 | |||||
Navios Corali(24) | Capesize | 2015 | 181,249 | $ | 25,201 | No | Oct-23 | |||||
— | 132.0% average BCI 5TC | Nov-23 | ||||||||||
— | 100.0% average BCI 5TC + $4,085 per day | Sep-23 | ||||||||||
Navios Felix(24) | Capesize | 2016 | 181,221 | $ | 18,905 | No | Dec-23 | |||||
— | 100.0% average BCI 5TC + $4,085 per day | Jan-24 | ||||||||||
Navios Mars | Capesize | 2016 | 181,259 | — | 126.0% average BCI 5TC | Dec-23 | ||||||
Navios Armonia(6) | Capesize | 2022 | 182,079 | $ | 20,750 | No | Sep-27 | |||||
Navios Azalea(6) | Capesize | 2022 | 182,064 | $ | 19,950 | No | Nov-27 | |||||
Navios Astra(25) | Capesize | 2022 | 182,392 | $ | 21,000 | No | Aug-27 | |||||
Navios Altair(6) | Capesize | 2023 | 182,115 | $ | 19,600 | No | Nov-27 | |||||
Navios Sakura(6) | Capesize | 2023 | 182,169 | $ | 19,550 | No | Mar-28 | |||||
Navios Amethyst(6) | Capesize | 2023 | 182,212 | $ | 19,550 | No | Feb-28 |
Owned Containerships | Type | Built | Capacity | Charter-Out | Index(2) | Expiration | ||||||
(TEU) | Rate(1) | Date(3) | ||||||||||
Navios Summer(5) | Containership | 2006 | $ | 39,795 | No | May-24 | ||||||
3,450 | $ | 30,320 | No | May-25 | ||||||||
$ | 20,845 | No | May-26 | |||||||||
$ | 34,110 | No | Jul-26 | |||||||||
Navios Verano (5) | Containership | 2006 | 3,450 | $ | 18,818 | No | Apr-26 | |||||
Hyundai Hongkong(7) | Containership | 2006 | 6,800 | $ | 30,119 | No | Dec-23 | |||||
$ | 21,083 | No | Dec-28 | |||||||||
Hyundai Singapore(7) | Containership | 2006 | 6,800 | $ | 30,119 | No | Dec-23 | |||||
$ | 21,083 | No | Dec-28 | |||||||||
Hyundai Busan(7) | Containership | 2006 | 6,800 | $ | 30,119 | No | Aug-24 | |||||
$ | 21,083 | No | Aug-29 | |||||||||
Hyundai Shanghai(7) | Containership | 2006 | 6,800 | $ | 30,119 | No | Aug-24 | |||||
$ | 21,083 | No | Aug-29 | |||||||||
Hyundai Tokyo(7) | Containership | 2006 | 6,800 | $ | 30,119 | No | Dec-23 | |||||
$ | 21,083 | No | Dec-28 | |||||||||
Protostar N | Containership | 2007 | 2,741 | $ | 46,556 | No | Nov-25 | |||||
Navios Spring(5) | Containership | 2007 | 3,450 | $ | 58,500 | No | May-25 | |||||
Matson Lanai(5) | Containership | 2007 | 4,250 | $ | 55,794 | No | Jul-25 | |||||
Navios Indigo(5) | Containership | 2007 | $ | 43,875 | No | Apr-24 | ||||||
4,250 | $ | 34,125 | No | Apr-25 | ||||||||
$ | 24,375 | No | Apr-26 | |||||||||
$ | 41,438 | No | Aug-26 | |||||||||
Navios Vermilion(5) | Containership | 2007 | $ | 45,425 | No | Dec-23 | ||||||
4,250 | $ | 23,972 | No | Nov-24 | ||||||||
$ | 41,722 | No | Dec-24 | |||||||||
Navios Verde(5) | Containership | 2007 | 4,250 | $ | 21,725 | No | Apr-25 | |||||
Navios Amarillo(5) | Containership | 2007 | $ | 92,381 | No | Jan-24 | ||||||
4,250 | $ | 63,956 | No | Jan-25 | ||||||||
$ | 28,425 | No | Jan-26 | |||||||||
$ | 9,475 | No | Jan-28 | |||||||||
Navios Azure | Containership | 2007 | 4,250 | $ | 20,748 | No | Apr-26 | |||||
Navios Domino(5) | Containership | 2008 | 4,250 | $ | 23,453 | No | Sep-25 | |||||
Navios Delight(5) | Containership | 2008 | 4,250 | $ | 45,425 | No | Jan-24 | |||||
Navios Magnolia | Containership | 2008 | $ | 45,425 | No | Nov-23 | ||||||
4,730 | $ | 23,972 | No | Oct-24 | ||||||||
$ | 41,722 | No | Nov-24 |
Navios Jasmine | Containership | 2008 | 4,730 | $ | 60,000 | No | Apr-25 | |||||
Navios Chrysalis | Containership | 2008 | 4,730 | $ | 23,453 | No | Jun-25 | |||||
Navios Nerine | Containership | 2008 | $ | 45,425 | No | Oct-23 | ||||||
4,730 | $ | 23,972 | No | Sep-24 | ||||||||
$ | 41,722 | No | Oct-24 | |||||||||
Spectrum N | Containership | 2009 | 2,546 | $ | 36,538 | No | Mar-25 | |||||
Navios Devotion(5) | Containership | 2009 | $ | 43,875 | No | Mar-24 | ||||||
4,250 | $ | 34,125 | No | Mar-25 | ||||||||
$ | 24,375 | No | Mar-26 | |||||||||
$ | 41,438 | No | Jul-26 | |||||||||
Navios Destiny(5) | Containership | 2009 | $ | 45,425 | No | Nov-23 | ||||||
4,250 | $ | 23,972 | No | Oct-24 | ||||||||
$ | 41,722 | No | Nov-24 | |||||||||
Navios Lapis | Containership | 2009 | 4,250 | $ | 20,244 | No | Apr-24 | |||||
Navios Tempo | Containership | 2009 | 4,250 | $ | 44,438 | No | Sep-25 | |||||
Navios Miami | Containership | 2009 | $ | 45,425 | No | Nov-23 | ||||||
4,563 | $ | 23,972 | No | Oct-24 | ||||||||
$ | 41,722 | No | Nov-24 | |||||||||
Navios Dorado | Containership | 2010 | 4,250 | $ | 21,676 | No | Jun-24 | |||||
Zim Baltimore | Containership | 2010 | $ | 43,875 | No | Jan-24 | ||||||
4,360 | $ | 34,125 | No | Jan-25 | ||||||||
$ | 24,375 | No | Jan-26 | |||||||||
$ | 41,438 | No | May-26 | |||||||||
Navios Bahamas | Containership | 2010 | 4,360 | $ | 60,000 | No | May-25 | |||||
Zim Carmel | Containership | 2010 | $ | 42,164 | No | Apr-24 | ||||||
4,360 | $ | 32,689 | No | Apr-25 | ||||||||
$ | 23,214 | No | Apr-26 | |||||||||
$ | 39,795 | No | Jun-26 | |||||||||
Navios Unison(5) | Containership | 2010 | 10,000 | $ | 26,276 | No | Jun-26 | |||||
Navios Constellation(5) | Containership | 2011 | 10,000 | $ | 26,276 | No | Jun-26 | |||||
Fleur N | Containership | 2012 | 2,782 | $ | 19,750 | No | Mar-24 | |||||
Ete N | Containership | 2012 | 2,782 | $ | 19,750 | No | Feb-24 |
Owned Tanker Vessels | Type | Built | Capacity | Charter-Out | Profit Sharing | Expiration | ||||||
(DWT) | Rate(1) | Arrangements | Date(3) | |||||||||
Hector N | MR1 Product Tanker | 2008 | 38,402 | $ | 15,306 | No | Oct-23 | |||||
Nave Equinox | MR2 Product Tanker | 2007 | 50,922 | $ | 20,392(8) | No | Nov-24 | |||||
Nave Pulsar (24) | MR2 Product Tanker | 2007 | 50,922 | $ | 27,650 | No | Sep-23 | |||||
$ | 21,231(8) | No | Sep-25 | |||||||||
Nave Orbit | MR2 Product Tanker | 2009 | 50,470 | $ | 15,306 | No | Oct-24 | |||||
Nave Equator | MR2 Product Tanker | 2009 | 50,542 | $ | 23,651 | No | Oct-23 | |||||
$ | 23,305 | No | Sep-24 | |||||||||
Nave Aquila (5) | MR2 Product Tanker | 2012 | 49,991 | $ | 27,181 | No | Sep-23 | |||||
$ | 27,156 | No | Jun-24 | |||||||||
Nave Atria (5) | MR2 Product Tanker | 2012 | 49,992 | $ | 14,887 | No | Nov-24 | |||||
Nave Capella | MR2 Product Tanker | 2013 | 49,995 | $ | 22,138 | No | Jan-25 | |||||
Nave Alderamin | MR2 Product Tanker | 2013 | 49,998 | $ | 22,138 | No | Nov-24 | |||||
Nave Bellatrix (5) | MR2 Product Tanker | 2013 | 49,999 | $ | 25,675 | No | Aug-24 | |||||
$ | 19,750 | No | Aug-25 | |||||||||
Nave Orion (5) | MR2 Product Tanker | 2013 | 49,999 | $ | 22,138 | No | Dec-24 | |||||
Nave Titan | MR2 Product Tanker | 2013 | 49,999 | $ | 25,891 | No | Feb-25 | |||||
Bougainville | MR2 Product Tanker | 2013 | 50,626 |
$ |
Floating Rate(9) | No | Sep-23 | |||||
21,800(26) | No | Oct-26 | ||||||||||
Nave Pyxis | MR2 Product Tanker | 2014 | 49,998 | $ | 25,891 | No | Jan-25 | |||||
Nave Luminosity | MR2 Product Tanker | 2014 | 49,999 | $ | 23,004(10) | No | Dec-25 | |||||
Nave Jupiter | MR2 Product Tanker | 2014 | 49,999 | $ | 16,491 | No | Sep-23 | |||||
Nave Velocity | MR2 Product Tanker | 2015 | 49,999 | $ | 15,553(11) | No | Oct-24 |
Nave Sextans | MR2 Product Tanker | 2015 | 49,999 | $ | 23,196(10) | No | May-26 | |||||
Nave Ariadne | LR1 Product Tanker | 2007 | 74,671 | Floating Rate(12) | No | Dec-23 | ||||||
Nave Cielo | LR1 Product Tanker | 2007 | 74,671 | $ | 16,335 | No | Sep-23 | |||||
$ | 26,564 | No | Jan-24 | |||||||||
Nave Andromeda | LR1 Product Tanker | 2011 | 75,000 | $ | 28,394 | No | Mar-25 | |||||
Nave Cetus | LR1 Product Tanker | 2012 | 74,581 | $ | 32,094 | No | Jul-25 | |||||
Nave Cassiopeia | LR1 Product Tanker | 2012 | 74,711 | $ | 33,150(13) | No | Jan-25 | |||||
Nave Estella | LR1 Product Tanker | 2012 | 75,000 | $ | 28,394 | No | Dec-24 | |||||
Nave Rigel | LR1 Product Tanker | 2013 | 74,673 | Floating Rate(14) | No | Dec-23 | ||||||
Nave Atropos | LR1 Product Tanker | 2013 | 74,695 | $ | 21,971 | No | Oct-24 | |||||
Nave Galactic | VLCC | 2009 | 297,168 | $ | 45,425 | No | Dec-23 | |||||
Nave Spherical | VLCC | 2009 | 297,188 | Floating Rate | Yes(15) | Jan-24 | ||||||
Nave Constellation | VLCC | 2010 | 296,988 | Scheduled | No | — | ||||||
repairs | ||||||||||||
Nave Quasar | VLCC | 2010 | 297,376 | Freight | No | Sep-23 | ||||||
voyage | ||||||||||||
Nave Synergy | VLCC | 2010 | 299,973 | Freight | No | Sep-23 | ||||||
voyage | ||||||||||||
Nave Universe | VLCC | 2011 | 297,066 | Freight | No | Oct-23 | ||||||
voyage | ||||||||||||
Nave Buena Suerte | VLCC | 2011 | 297,491 | $ | 47,906 | Yes(16) | Jun-25 |
Bareboat-in Vessels | Type | Built | Capacity | Charter-Out | Index(2) | Expiration | ||||||
(DWT) | Rate(1) | Date(3) | ||||||||||
Navios Libra | Panamax | 2019 | 82,011 | — | 109.75% average BPI 82 | Sep-23 | ||||||
$ | 13,418 | No | Dec-23 | |||||||||
$ | 11,955 | No | Mar-24 | |||||||||
— | 109.75% average BPI 82 | Jun-24 | ||||||||||
Navios Star | Panamax | 2021 | 81,994 | $ | 14,808 | No | Sep-23 | |||||
$ | 12,637 | No | Dec-23 | |||||||||
$ | 11,526 | No | Mar-24 | |||||||||
— | 110.0% average BPI 82 | Apr-24 | ||||||||||
Navios Amitie | Panamax | 2021 | 82,002 | $ $ |
— | 110.0% average BPI 82 | Sep-23 | |||||
12,531 | No | Dec-23 | ||||||||||
11,896 | No | Mar-24 | ||||||||||
— | 110.0% average BPI 82 | Apr-24 | ||||||||||
Baghdad | VLCC | 2020 | 313,433 | $ | 27,816(17) | No | Sep-30 | |||||
Nave Electron | VLCC | 2021 | 313,239 | $ | 47,906 | Yes(16) | Jan-26 | |||||
Erbil | VLCC | 2021 | 313,486 | $ | 27,816(17) | No | Feb-31 | |||||
Nave Celeste | VLCC | 2022 | 313,418 | Floating rate | Yes(18) | Jul-24 |
Chartered-in Vessels | Type | Built | Capacity | Charter-Out | Index(2) | Expiration | ||||||
(DWT) | Rate(1) | Date(3) | ||||||||||
Navios Lyra | Handysize | 2012 | 34,718 | $ | 9,975 | No | Oct-23 | |||||
Navios Venus | Ultra- | 2015 | 61,339 | — | 111.0% average BSI 58 | Feb-24 | ||||||
Handymax | 10TC | |||||||||||
Navios Amber(19) | Panamax | 2015 | 80,994 | $ | 19,000 | No | Apr-24 | |||||
Navios Coral(19) | Panamax | 2016 | 84,904 | $ | — | 108.0% average BPI 82 | Sep-23 | |||||
14,486 | No | Dec-23 | ||||||||||
— | 108.0% average BPI 82 | Feb-24 | ||||||||||
Navios Citrine(19) | Panamax | 2017 | 81,626 | $ | — | 110.0% average BPI 4TC | Sep-23 | |||||
13,570 | No | Dec-23 | ||||||||||
— | 110.0% average BPI 4TC | Oct-24 | ||||||||||
Navios Dolphin(19) | Panamax | 2017 | 81,630 | $ | 14,013(20) | No | Dec-24 | |||||
Navios Gemini(21) | Panamax | 2018 | 81,704 | $ | 14,919 | No | Oct-23 | |||||
Navios Horizon I(4) | Panamax | 2019 | 81,692 | — | 108.5% average BPI 82 | Oct-23 |
Expected | Capacity | Charter-Out | Expiration | |||||||||
Owned Containerships to be Delivered | Type | Delivery | (TEU) | Rate(1) | Index(2) | Date(3) | ||||||
TBN I | Containership | H2 2023 | 5,300 | $ | 42,900 | No | Sep-24 | |||||
$ | 39,000 | No | Sep-25 | |||||||||
$ | 37,050 | No | Sep-26 | |||||||||
$ | 35,100 | No | Sep-27 | |||||||||
$ | 31,200 | No | Sep-28 | |||||||||
$ | 37,050 | No | Nov-28 | |||||||||
TBN II | Containership | H2 2023 | 5,300 | $ | 42,900 | No | Oct-24 | |||||
$ | 39,000 | No | Oct-25 | |||||||||
$ | 37,050 | No | Oct-26 | |||||||||
$ | 35,100 | No | Oct-27 | |||||||||
$ | 31,200 | No | Oct-28 | |||||||||
$ | 37,050 | No | Dec-28 | |||||||||
TBN VII | Containership | H2 2023 | 5,300 | $ | 42,900 | No | Nov-24 | |||||
$ | 39,000 | No | Nov-25 | |||||||||
$ | 37,050 | No | Nov-26 | |||||||||
$ | 35,100 | No | Nov-27 | |||||||||
$ | 31,200 | No | Nov-28 | |||||||||
$ | 37,050 | No | Jan-29 | |||||||||
TBN III | Containership | H1 2024 | 5,300 | $ | 42,900 | No | May-25 | |||||
$ | 39,000 | No | May-26 | |||||||||
$ | 37,050 | No | May-27 | |||||||||
$ | 35,100 | No | May-28 | |||||||||
$ | 31,200 | No | May-29 | |||||||||
$ | 37,050 | No | Jul-29 | |||||||||
TBN IV | Containership | H1 2024 | 5,300 | $ | 42,900 | No | Jun-25 | |||||
$ | 39,000 | No | Jun-26 | |||||||||
$ | 37,050 | No | Jun-27 | |||||||||
$ | 35,100 | No | Jun-28 | |||||||||
$ | 31,200 | No | Jun-29 | |||||||||
$ | 37,050 | No | Aug-29 | |||||||||
TBN VIII | Containership | H1 2024 | 5,300 | $ | 42,900 | No | Mar-25 | |||||
$ | 39,000 | No | Mar-26 | |||||||||
$ | 37,050 | No | Mar-27 | |||||||||
$ | 35,100 | No | Mar-28 | |||||||||
$ | 31,200 | No | Mar-29 | |||||||||
$ | 37,050 | No | May-29 | |||||||||
TBN V | Containership | H2 2024 | 5,300 | $ | 42,900 | No | Aug-25 | |||||
$ | 39,000 | No | Aug-26 | |||||||||
$ | 37,050 | No | Aug-27 | |||||||||
$ | 35,100 | No | Aug-28 | |||||||||
$ | 31,200 | No | Aug-29 | |||||||||
$ | 37,050 | No | Oct-29 | |||||||||
TBN VI | Containership | H2 2024 | 5,300 | $ | 42,900 | No | Nov-25 | |||||
$ | 39,000 | No | Nov-26 | |||||||||
$ | 37,050 | No | Nov-27 | |||||||||
$ | 35,100 | No | Nov-28 | |||||||||
$ | 31,200 | No | Nov-29 | |||||||||
$ | 37,050 | No | Jan-30 |
TBN IX | Containership | H2 2024 | 5,300 | $ | 37,500 | No | Feb-30 | |||||
TBN X | Containership | H2 2024 | 5,300 | $ | 37,500 | No | Apr-30 | |||||
TBN XVIII | Containership | H1 2025 | 7,700 | $ | 57,213 | No | Jan-28 | |||||
$ | 52,238 | No | Jan-31 | |||||||||
$ | 37,313 | No | Jan-33 | |||||||||
$ | 27,363 | No | Jan-35 | |||||||||
$ | 24,875(23) | No | Jan-37 | |||||||||
TBN XVII | Containership | H2 2024 | 7,700 | $ | 57,213 | No | Dec-27 | |||||
$ | 52,238 | No | Dec-30 | |||||||||
$ | 37,313 | No | Dec-32 | |||||||||
$ | 27,363 | No | Dec-34 | |||||||||
$ | 24,875(23) | No | Dec-36 |
Type | Expected | Capacity | Charter-Out | Profit Sharing | Expiration | |||||||
Tanker Vessels to be Delivered | Delivery | (DWT) | Rate(1) | Arrangements | Date(3) | |||||||
TBN XI | Aframax / LR2 | H1 2024 | 115,000 | $ | 26,366(22) | No | Apr-29 | |||||
TBN XII | Aframax / LR2 | H2 2024 | 115,000 | $ | 26,366(22) | No | Jul-29 | |||||
TBN XIII | Aframax / LR2 | H2 2024 | 115,000 | $ | 25,576(22) | No | Oct-29 | |||||
TBN XIV | Aframax / LR2 | H2 2024 | 115,000 | $ | 25,576(22) | No | Dec-29 | |||||
TBN XV | Aframax / LR2 | H1 2025 | 115,000 | $ | 27,798(22) | No | Mar-30 | |||||
TBN XVI | Aframax / LR2 | H1 2025 | 115,000 | $ | 27,798(22) | No | May-30 | |||||
TBN XIX(6) | MR2 Product | H2 2025 | 52,000 | $ | 22,959 | No | Nov-30 | |||||
Tanker | ||||||||||||
TBN XX(6) | MR2 Product | H1 2026 | 52,000 | $ | 22,959 | No | May-31 | |||||
Tanker | ||||||||||||
TBN XXI(6) | MR2 Product | H2 2026 | 52,000 | — | — | — | ||||||
Tanker | ||||||||||||
TBN XXII(6) | MR2 Product | H1 2027 | 52,000 | — | — | — | ||||||
Tanker | ||||||||||||
TBN XXIII(6) | MR2 Product | H1 2027 | 52,000 | — | — | — | ||||||
Tanker | ||||||||||||
TBN XXIV(6) | MR2 Product | H1 2027 | 52,000 | — | — | — | ||||||
Tanker |
(1) | Daily charter-out rate per day, net of commissions. |
(2) | Index rates exclude commissions. |
(3) | Estimated dates assuming the midpoint or Company’s estimate of the redelivery period by charterers. |
(4) | Vessel agreed to be acquired. |
(5) | The vessel is subject to a sale and leaseback transaction with a purchase obligation at the end of the lease term. |
(6) | The vessel is subject to a bareboat contract with a purchase option at the end of the contract. |
(7) | Includes optional years (Navios Partners’ option) after 2023. |
(8) | The premium for when the vessel is trading on ice or follow ice breaker is $1,481 per day. |
(9) | Rate based on Scorpio MR pool earnings. |
(10) | Charterer’s option to extend the charter for one year at $27,913 net per day. |
(11) | Charterer’s option to extend the charter for one year at $16,540 net per day plus one year at $17,528 net per day. |
(12) | Rate based on Penfield pool earnings. |
(13) | Charterer’s option to extend the charter for one year at $40,950 net per day. |
(14) | Rate based on LR8 pool earnings. |
(15) | Contract provides for TD3C-TCE index plus $1,463 premium. |
(16) | Profit sharing arrangement of 35% above $54,388, 40% above $59,388 and 50% above $69,388. |
(17) | Charterer’s option to extend the bareboat charter for five years at $29,751 net per day. |
(18) | Bareboat charter based on adjusted TD3C-WS with floor $22,572 and collar at $29,700. |
(19) | The vessel is subject to a charter-in agreement with a purchase option at the end of the agreement, classified as a finance lease. |
(20) | Charterer’s option to extend charter for one year at $15,200 net per day. |
(21) | Purchase option in the form of the right of first refusal and profit share on sale of vessel. |
(22) | Charterer has the option to extend for five further one-year options at rates increasing by $1,234 net per day each year. |
(23) | Charterer’s option to extend charter for two years at $24,875 net per day. |
(24) | The vessel is subject to a sale and leaseback transaction with a purchase option at the end of the lease term. |
(25) | The vessel is subject to a bareboat contract with a purchase obligation at the end of the contract. |
(26) | Charterer’s option to extend charter for one year at $24,900 net per day. |
Our Charters
We provide seaborne shipping services under short, medium, and long-term time charters, bareboat charters and voyage charters with customers that we believe are creditworthy. For the six month period ended June 30, 2023, no customer accounted for 10% or more of our total revenues. For the six month period ended June 30, 2022, Singapore Marine Pte Ltd. (“Singapore Marine”) represented approximately 10.8% of total revenues. No other customers accounted for 10% or more of total revenues for any of the periods presented.
Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charter hire rates, which, in turn, are affected by a number of factors, including:
• | the duration of the charters; |
• | the level of spot and long-term market rates at the time of charters; |
• | decisions relating to vessel acquisitions and disposals; |
• | the amount of time spent positioning vessels; |
• | the amount of time that vessels spend in dry dock undergoing repairs and upgrades; |
• | the age, condition and specifications of the vessels; |
• | the aggregate level of supply and demand in the liquid, dry and containerized cargo shipping industry; |
• | economic conditions, such as the impact of inflationary cost pressures, decreased consumer discretionary spending, fluctuations in foreign currency exchange rates, increasing interest rates, and the possibility of recession or financial market instability; |
• | armed conflicts, such as the Russian/Ukrainian conflicts; and |
• | the outbreak of global epidemics or pandemics such as coronavirus (COVID-19). |
Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of global revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate our vessels in the medium to long-term charter market. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control. Please read “Risk Factors” in our 2022 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.
We could lose a customer or the benefits of a charter if:
• | the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise; |
• | the customer exercises certain rights to terminate the charter of the vessel; |
• | the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or |
• | a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or political unrest prevents us from performing services for that customer. |
Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.
Trends and Factors Affecting Our Future Results of Operations
We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Please read “Risk Factors” in our 2022 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.
Results of Operations
Overview
The following table reflects certain key indicators of Navios Partners’ fleet performance for the three and six month periods ended June 30, 2023 and 2022.
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Available Days(1) | 13,572 | 11,269 | 27,480 | 22,497 | ||||||||
Operating Days(2) | 13,474 | 11,151 | 27,223 | 22,223 | ||||||||
Fleet Utilization(3) | 99.3% | 99.0% | 99.1% | 98.8% | ||||||||
Time Charter Equivalent rate (per day)(4) | $ | 23,900 | $ | 23,823 | $ | 22,337 | $ | 22,107 | ||||
Vessels operating at end of periods | 154 | 128 | 154 | 128 |
(1) | Available days for the fleet represent total calendar days the vessels were in Navios Partners’ possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys and ballast days relating to voyages. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues. |
(2) | Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues. |
(3) | Fleet utilization is the percentage of time that Navios Partners’ vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, dry dockings or special surveys. |
(4) | Time Charter Equivalent rate (“TCE rate”) is defined as voyage, time charter revenues and charter-out revenues under bareboat contracts (grossed up by currently applicable fixed vessel operating expenses) less voyage expenses during a period divided by the number of available days during the period. The TCE rate per day is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet. |
FINANCIAL HIGHLIGHTS
The following table presents consolidated revenue and expense information for the three and six month periods ended June 30, 2023 and 2022.
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Time charter and voyage revenues | $ | 346,938 | $ | 280,661 | $ | 656,460 | $ | 517,278 | ||||
Time charter and voyage expenses | (41,956) | (21,718) | (81,719) | (38,861) | ||||||||
Direct vessel expenses | (17,764) | (12,920) | (32,204) | (24,113) | ||||||||
Vessel operating expenses (entirely through related parties transactions) | (82,550) | (73,989) | (165,766) | (147,161) | ||||||||
General and administrative expenses | (20,536) | (14,170) | (40,035) | (28,086) | ||||||||
Depreciation and amortization of intangible assets | (54,037) | (41,684) | (108,255) | (84,550) | ||||||||
Amortization of unfavorable lease terms | 5,322 | 17,587 | 12,910 | 39,426 | ||||||||
Gain on sale of vessels, net | 10,151 | — | 43,601 | — | ||||||||
Interest expense and finance cost, net | (33,330) | (14,522) | (68,854) | (27,749) | ||||||||
Interest income | 2,483 | 22 | 4,100 | 24 | ||||||||
Other expense, net | (2,413) | (1,107) | (8,765) | (2,383) | ||||||||
Net income | $ | 112,308 | $ | 118,160 | $ | 211,473 | $ | 203,825 | ||||
EBITDA(1) | $ | 201,601 | $ | 163,478 | $ | 390,437 | $ | 289,596 | ||||
Adjusted EBITDA(1) | $ | 191,450 | $ | 163,478 | $ | 346,836 | $ | 289,596 | ||||
Operating Surplus (1) | $ | 98,620 | $ | 90,245 | $ | 164,368 | $ | 146,070 |
(1) | EBITDA, Adjusted EBITDA and Operating Surplus are non-GAAP financial measures. See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus” for a description of EBITDA, Adjusted EBITDA and Operating Surplus and a reconciliation of EBITDA, Adjusted EBITDA and Operating Surplus to the most comparable measure under U.S. GAAP. |
Period over Period Comparisons
For the Three Month Period ended June 30, 2023 compared to the Three Month Period ended June 30, 2022
Time charter and voyage revenues: Time charter and voyage revenues of Navios Partners for the three month period ended June 30, 2023 increased by $66.2 million, or 23.6%, to $346.9 million, as compared to $280.7 million for the same period in 2022. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the slight increase in the TCE rate. For the three month periods ended June 30, 2023 and 2022, the time charter and voyage revenues were negatively affected by $7.5 million and $11.8 million, respectively, relating to the straight-line effect of the containerships and tankers charters with de-escalating rates. For the three month period ended June 30, 2023, the TCE rate increased by 0.3% to $23,900 per day, as compared to $23,823 per day for the same period in 2022. The available days of the fleet increased by 20.4% to 13,572 days for the three month period ended June 30, 2023, as compared to 11,269 days for the same period in 2022 mainly due to the acquisition of the 36-vessel drybulk fleet from Navios Holdings and the deliveries of newbuilding and secondhand vessels, partially mitigated by the sale of vessels.
Time charter and voyage expenses: Time charter and voyage expenses for the three month period ended June 30, 2023 increased by $20.3 million to $42.0 million, as compared to $21.7 million for the three month period ended June 30, 2022. The increase was mainly attributable to a: (i) $9.7 million increase in bareboat and charter-in hire expense of the tanker and drybulk fleet primarily due to the expansion of our fleet, (ii) $7.1 million increase in bunkers expenses arising from the increased number of freight voyages in the second quarter of 2023; (iii) $1.7 million increase in port expenses; (iv) $1.4 million increase in other voyage expenses; and v) $0.4 million increase in brokers’ commissions.
Direct vessel expenses: Direct vessel expenses for the three month period ended June 30, 2023, increased by $4.9 million to $17.8 million, as compared to $12.9 million for the three month period ended June 30, 2022. The increase of $4.9 million was mainly attributable to the amortization of the deferred drydock and special survey costs due to the increase in the size of our fleet.
Vessel operating expenses: Vessel operating expenses for the three month period ended June 30, 2023, increased by approximately $8.6 million to $82.6 million, as compared to $74.0 million for the same period in 2022. The increase was mainly due to the expansion of our fleet and the adjustment of the fixed daily fee in accordance with the management agreements (the “Management Agreements”), partially mitigated by the sale of vessels.
General and administrative expenses: General and administrative expenses increased by $6.3 million to $20.5 million for the three month period ended June 30, 2023, as compared to $14.2 million for the three month period ended June 30, 2022. The increase was mainly due to a: (i) $5.5 million increase in administrative expenses paid to the Manager (as defined herein) as per the administrative services agreement (the “Administrative Services Agreement”), mainly due to the expansion of our fleet, partially mitigated by the sale of vessels; and (ii) $0.8 million increase in professional and legal fees, as well as audit fees and other administrative expenses.
Depreciation and amortization of intangible assets: Depreciation and amortization of intangible assets amounted to $54.0 million for the three month period ended June 30, 2023, as compared to $41.7 million for the three month period ended June 30, 2022. The increase of $12.3 million was mainly attributable to a: (i) $13.1 million increase due to the delivery of the 36-vessel drybulk fleet in Navios Partners’ owned fleet; (ii) $3.4 million increase in depreciation expense due to the delivery of ten vessels during the second half of 2022 and the first half of 2023; and (iii) $0.3 million increase in depreciation expense due to vessel improvements. The above increase was partially mitigated by a: (i) $3.5 million decrease due to the sale of 19 vessels during the second half of 2022 and the first half of 2023; and (ii) $1.0 million decrease in amortization of favorable lease terms. Depreciation of vessels is calculated using an estimated useful life of 25 years for drybulk and tanker vessels and 30 years for containerships, respectively, from the date the vessel was originally delivered from the shipyard.
Amortization of unfavorable lease terms: Amortization of unfavorable lease terms amounted to $5.3 million and $17.6 million for the three month periods ended June 30, 2023 and June 30, 2022, respectively, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Maritime Containers L.P. (“Navios Containers”) and at the date of obtaining control of Navios Maritime Acquisition Corporation (“Navios Acquisition”).
Gain on sale of vessels, net: Gain on sale of vessels amounted to $10.2 million for the three month period ended June 30, 2023, relating to the sale of four of our vessels. There was no gain on sale of vessels for the three month period ended June 30, 2022.
Interest expense and finance cost, net: Interest expense and finance cost, net for the three month period ended June 30, 2023 increased by $18.8 million to $33.3 million, as compared to $14.5 million for the three month period ended June 30, 2022. The increase was mainly due to: (i) the increase in Navios Partner’s weighted average loan balance to $1,899.3 million for the three month period ended June 30, 2023, as compared to $1,312.0 million for the three month period ended June 30, 2022; and (ii) the increase of the weighted average interest rate for the three month period ended June 30, 2023 to 7.44% from 4.27% for the three month period ended June 30, 2022.
Interest income: Interest income amounted to $2.5 million for the three month period ended June 30, 2023. There was less than $0.1 million interest income for the three month period ended June 30, 2022.
Other expense, net: Other expense, net for the three month period ended June 30, 2023 increased by $1.3 million to $2.4 million, as compared to $1.1 million for the three month period ended June 30, 2022, mainly due to the increase in expenses related to claims reserve and other miscellaneous expenses.
Net income: Net income for the three month period ended June 30, 2023 amounted to $112.3 million as compared to $118.2 million net income for the three month period ended June 30, 2022. The decrease of $5.9 million was due to the factors discussed above.
Operating surplus: Navios Partners generated Operating Surplus for the three month period ended June 30, 2023 of $98.6 million, as compared to $90.2 million for the three month period ended June 30, 2022. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus” contained herein).
For the Six Month Period ended June 30, 2023 compared to the Six Month Period ended June 30, 2022
Time charter and voyage revenues: Time charter and voyage revenues of Navios Partners for the six month period ended June 30, 2023 increased by $139.2 million, or 26.9%, to $656.5 million, as compared to $517.3 million for the same period in 2022. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the slight increase in the TCE rate. For the six month periods ended June 30, 2023 and 2022, the time charter and voyage revenues were negatively affected by $20.5 million and $16.5 million, respectively, relating to the straight-line effect of the containerships and tankers charters with de-escalating rates. For the six month period ended June 30, 2023, the TCE rate increased by 1.0% to $22,337 per day, as compared to $22,107 per day for the same period in 2022. The available days of the fleet increased by 22.1% to 27,480 days for the six month period ended June 30, 2023, as compared to 22,497 days for the same period in 2022 mainly due to the acquisition of the 36-vessel drybulk fleet from Navios Holdings and the deliveries of newbuilding and secondhand vessels, partially mitigated by the sale of vessels.
Time charter and voyage expenses: Time charter and voyage expenses for the six month period ended June 30, 2023 increased by $42.8 million to $81.7 million, as compared to $38.9 million for the six month period ended June 30, 2022. The increase was mainly attributable to a: (i) $19.5 million increase in bareboat and charter-in hire expense of the tanker and drybulk fleet primarily due to the expansion of our fleet; (ii) $17.0 million increase in bunkers expenses arising from the increased number of freight voyages during first half of 2023; (iii) $2.6 million increase in port expenses; and (iv) $2.2 million increase in other voyage expenses; and v) $1.5 million increase in brokers’ commissions.
Direct vessel expenses: Direct vessel expenses for the six month period ended June 30, 2023, increased by $8.1 million to $32.2 million, as compared to $24.1 million for the six month period ended June 30, 2022. The increase of $8.1 million was mainly attributable to the amortization of the deferred drydock and special survey costs due to the increase in the size of our fleet.
Vessel operating expenses: Vessel operating expenses for the six month period ended June 30, 2023, increased by approximately $18.6 million to $165.8 million, as compared to $147.2 million for the same period in 2022. The increase was mainly due to the expansion of our fleet and the adjustment of the fixed daily fee in accordance with the Management Agreements, partially mitigated by the sale of vessels.
General and administrative expenses: General and administrative expenses increased by $11.9 million to $40.0 million for the six month period ended June 30, 2023, as compared to $28.1 million for the six month period ended June 30, 2022. The increase was mainly due to a: (i) $9.4 million increase in administrative expenses paid to the Manager (as defined herein) as per the Administrative Services Agreement, mainly due to the expansion of our fleet, partially mitigated by the sale of vessels; and (ii) $2.6 million increase in professional and legal fees, as well as audit fees and other administrative expenses; partially mitigated by a $0.1 million decrease in stock plan expenses.
Depreciation and amortization of intangible assets: Depreciation and amortization of intangible assets amounted to $108.3 million for the six month period ended June 30, 2023, as compared to $84.6 million for the six month period ended June 30, 2022. The increase of $23.7 million was mainly attributable to a: (i) $26.7 million increase due to the delivery of the 36-vessel drybulk fleet in Navios Partners’ owned fleet; (ii) $5.5 million increase in depreciation expense due to the delivery of ten vessels during second half of 2022 and first half of 2023; and (iii) $0.7 million increase in depreciation expense due to vessel improvements. The above increase was partially mitigated by a: (i) $5.9 million decrease due to the sale of 19 vessels during the second half of 2022 and first half of 2023; and (ii) $3.3 million decrease in amortization of favorable lease terms. Depreciation of vessels is calculated using an estimated useful life of 25 years for drybulk and tanker vessels and 30 years for containerships, respectively, from the date the vessel was originally delivered from the shipyard.
Amortization of unfavorable lease terms: Amortization of unfavorable lease terms amounted to $12.9 million and $39.4 million for the six month periods ended June 30, 2023 and June 30, 2022, respectively, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Containers and at the date of obtaining control of Navios Acquisition.
Gain on sale of vessels, net: Gain on sale of vessels amounted to $43.6 million for the six month period ended June 30, 2023, relating to the sale of 12 of our vessels. There was no gain on sale of vessels for the six month period ended June 30, 2022.
Interest expense and finance cost, net: Interest expense and finance cost, net for the six month period ended June 30, 2023 increased by $41.2 million to $68.9 million, as compared to $27.7 million for the six month period ended June 30, 2022. The increase was mainly due to: (i) the increase in Navios Partner’s weighted average loan balance to $1,901.9 million for the six month period ended June 30, 2023, as compared to $1,332.0 million for the six month period ended June 30, 2022; and (ii) the increase of the weighted average interest rate for the six month period ended June 30, 2023 to 7.20% from 3.98% for the six month period ended June 30, 2022.
Interest income: Interest income amounted to $4.1 million for the six month period ended June 30, 2023. There was less than $0.1 million interest income for the six month period ended June 30, 2022.
Other expense, net: Other expense, net for the six month period ended June 30, 2023 increased by $6.4 million to $8.7 million, as compared to $2.3 million for the six month period ended June 30, 2022, mainly due to the increase in expenses related to claims reserve and foreign exchange differences.
Net income: Net income for the six month period ended June 30, 2023 amounted to $211.5 million as compared to $203.8 million net income for the six month period ended June 30, 2022. The increase of $7.7 million was due to the factors discussed above.
Operating surplus: Navios Partners generated Operating Surplus for the six month period ended June 30, 2023 of $164.4 million, as compared to $146.1 million for the six month period ended June 30, 2022. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus” contained herein).
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Liquidity and Capital Resources
We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from our equity offerings, operations, proceeds from assets’ sales, long-term bank borrowings and other debt raisings. In addition to distributions on our units, our primary short-term liquidity needs are to fund general working capital requirements, cash reserve requirements including those under our credit facilities and debt service, while our long-term liquidity needs primarily relate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. As of June 30, 2023, Navios Partners’ current assets totaled $363.9 million, while current liabilities totaled $440.8 million, resulting in a negative working capital position of $76.9 million. Navios Partners’ cash forecast indicates that it will generate sufficient cash through its contracted revenue of $3.3 billion as of August 25, 2023 and cash proceeds from the sale of vessels (see Note 4 - Vessels, net to the unaudited condensed consolidated financial statements included elsewhere in this Report) to make the required principal and interest payments on its indebtedness, provide for the normal working capital requirements of the business for a period of at least 12 months from the date of issuance of our unaudited condensed consolidated financial statements.
Generally, our long-term sources of funds derive from cash from operations, long-term bank borrowings and other debt or equity financings to fund acquisitions and expansion and investment capital expenditures. We cannot assure you that we will be able to secure adequate financing or to obtain additional funds on favorable terms to meet our liquidity needs.
Cash deposits and cash equivalents in excess of amounts covered by government provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and cash equivalents in excess of government provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.
The following table presents cash flow information derived from the unaudited condensed Consolidated Statements of Cash Flows of Navios Partners for the six month periods ended June 30, 2023 and 2022.
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | |||||
(unaudited) | (unaudited) | |||||
Net cash provided by operating activities | $ | 228,343 | $ | 147,163 | ||
Net cash provided by/ (used in) investing activities | 31,665 | (61,860) | ||||
Net cash used in financing activities | (165,054) | (80,125) | ||||
Increase in cash, cash equivalents and restricted cash | $ | 94,954 | $ | 5,178 |
Cash provided by operating activities for the six month period ended June 30, 2023 as compared to the cash provided by operating activities for the six month period ended June 30, 2022
Net cash provided by operating activities increased by $81.1 million to $228.3 million of cash provided by operating activities for the six month period ended June 30, 2023, as compared to $147.2 million of cash provided by operating activities for the same period in 2022. In determining net cash provided by operating activities, net income is adjusted for the effects of certain non-cash items as discussed below.
The aggregate adjustments to reconcile net income to net cash provided by operating activities was $108.6 million of non-cash positive net adjustments for the six month period ended June 30, 2023, which consisted mainly of the following adjustments: (i) $108.3 million depreciation and amortization of intangible assets; (ii) $29.2 million non-cash amortization of deferred revenue and straight-line effect of the containerships and tankers charters with de-escalating rates; (iii) $18.9 million amortization of deferred dry dock and special survey costs; (iv) $5.1 million amortization of operating lease assets/ liabilities; and (v) $3.6 million amortization and write-off of deferred finance costs and discount. These adjustments were partially mitigated by: (i) $43.6 million gain from sale of vessels, net; and (ii) $12.9 million amortization of unfavorable lease terms.
The net cash outflow resulting from the change in operating assets and liabilities of $91.8 million for the six month period ended June 30, 2023 resulted from: (i) a $104.7 million decrease in amounts due to related parties; (ii) a $40.8 million in payments for dry dock and special survey costs; (iii) an $8.0 million decrease in accounts payable; and (iv) a $1.8 million increase in amounts due from related parties. This was partially mitigated by a: (i) $43.6 million decrease in accounts receivable; (ii) $9.2 million decrease in prepaid expenses and other current assets; (iii) $7.8 million increase in accrued expenses; and (iv) $2.9 million increase in deferred revenue.
The aggregate adjustments to reconcile net income to net cash provided by operating activities was an $83.9 million non-cash positive net adjustments for the six month period ended June 30, 2022, which consisted mainly of the following adjustments: (i) $84.6 million depreciation and amortization of intangible assets; (ii) $23.4 million non-cash amortization of deferred revenue and straight line effect of the containerships charters with de-escalating rates; (iii) $12.9 million amortization of deferred dry dock and special survey costs; (iv) $2.7 million amortization and write-off of deferred finance costs and discount; and (v) $0.1 million stock based compensation. These adjustments were partially mitigated by: (i) $39.4 million amortization of unfavorable lease terms; and (ii) $0.4 million amortization of operating lease assets/ liabilities.
The net cash outflow resulting from the change in operating assets and liabilities of $140.5 million for the six month period ended June 30, 2022 resulted from: (i) a $64.2 million decrease in amounts due to related parties; (ii) a $28.5 million increase in prepaid expenses and other current assets; (iii) a $26.2 million in payments for dry dock and special survey costs; (iv) an $18.0 million increase in accounts receivable; and (v) a $15.8 million increase in amounts due from related parties. This was partially mitigated by: (i) an $8.4 million increase in accounts payable; (ii) a $3.6 million increase in accrued expenses; and (iii) a $0.2 million increase in deferred revenue.
Cash provided by investing activities for the six month period ended June 30, 2023 as compared to the cash used in investing activities for the six month period ended June 30, 2022
Net cash provided by investing activities for the six month period ended June 30, 2023 amounted to $31.7 million as compared to $61.9 million cash used in investing activities for the six month period ended June 30, 2022.
Cash provided by investing activities of $31.7 million for the six month period ended June 30, 2023 was mainly due to $215.8 million proceeds related to the sale of 12 vessels. This was partially mitigated by: (i) $113.6 million related to deposits for the acquisition/ option to acquire vessels and capitalized expenses; and (ii) $70.5 million related to vessels’ acquisitions and additions.
Cash used in investing activities of approximately $61.9 million for the six month period ended June 30, 2022 was mainly due to: (i) $55.6 million relating to deposits for the acquisition/ option to acquire vessels and capitalized expenses; and (ii) $6.3 million related to vessels’ additions.
Cash used in financing activities for the six month period ended June 30, 2023 as compared to cash used in financing activities for the six month period ended June 30, 2022
Net cash used in financing activities increased by approximately $85.0 million to $165.1 million outflow for the six month period ended June 30, 2023, as compared to $80.1 million outflow for the same period in 2022.
Cash used in financing activities of $165.1 million for the six month period ended June 30, 2023 was mainly due to: (i) $635.8 million repayments of loans and financial liabilities; (ii) $12.2 million payments of deferred finance costs related to the new credit facilities and financial liability; and (iii) $3.1 million payment in total for cash distributions. This was partially mitigated by $486.0 million of proceeds from the new credit facilities and sale and leaseback agreement.
Cash used in financing activities of $80.1 million for the six month period ended June 30, 2022 was mainly due to: (i) loans and financial liabilities repayments of $210.3 million; (ii) payment of total cash distributions of $3.1 million; and (iii) payment of $1.9 million of deferred finance costs relating to the new credit facilities. This was partially mitigated by $135.2 million of proceeds from new credit facilities.
Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and, Operating Surplus
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Net cash provided by operating activities | $ | 133,827 | $ | 142,010 | $ | 228,343 | $ | 147,163 | ||||
Net increase/ (decrease) in operating assets | 11,166 | 34,561 | (10,193) | 88,517 | ||||||||
Net decrease/ (increase) in operating liabilities | 39,923 | (8,033) | 101,946 | 51,980 | ||||||||
Net interest cost | 30,847 | 14,500 | 64,754 | 27,725 | ||||||||
Amortization and write-off of deferred finance cost | (1,587) | (1,353) | (3,618) | (2,677) | ||||||||
Amortization of operating lease assets/liabilities | (2,588) | 211 | (5,146) | 422 | ||||||||
Non-cash amortization of deferred revenue and straight-line | (20,137) | (18,378) | (29,248) | (23,452) | ||||||||
Stock-based compensation | (1) | (40) | (2) | (82) | ||||||||
Gain on sale of vessels, net | 10,151 | — | 43,601 | — | ||||||||
EBITDA(1) | $ | 201,601 | $ | 163,478 | $ | 390,437 | $ | 289,596 | ||||
Gain on sale of vessels, net | (10,151) | — | (43,601) | — | ||||||||
Adjusted EBITDA(1) | $ | 191,450 | $ | 163,478 | $ | 346,836 | $ | 289,596 | ||||
Cash interest income | 2,222 | 22 | 3,477 | 24 | ||||||||
Cash interest paid | (38,350) | (14,212) | (72,992) | (25,464) | ||||||||
Maintenance and replacement capital expenditures | (56,702) | (59,043) | (112,953) | (118,086) | ||||||||
Operating Surplus(2) | $ | 98,620 | $ | 90,245 | $ | 164,368 | $ | 146,070 |
(1) EBITDA and Adjusted EBITDA
EBITDA represents net income before interest and finance costs, depreciation and amortization (including intangible accelerated amortization) and income taxes. Adjusted EBITDA represents EBITDA excluding certain items, as described in the table above. Navios Partners uses Adjusted EBITDA as a liquidity measure and reconciles EBITDA and Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of: (i) net increase/ (decrease) in operating assets; (ii) net decrease/ (increase) in operating liabilities; (iii) net interest cost; (iv) amortization and write-off of deferred finance costs and discount; (v) gain on sale of assets, net; (vi) non-cash amortization of deferred revenue and straight-line effect of the containerships and tankers charters with de-escalating rates; (vii) stock-based compensation expense; and (viii) amortization of operating lease assets/ liabilities. Navios Partners believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Partners’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Partners also believes that EBITDA and Adjusted EBITDA are used: (i) by 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.
Each of EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Partners’ results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Partners’ performance. Furthermore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
EBITDA for the three month period ended June 30, 2023 and 2022 was affected by the items described in the table above. Excluding these items, Adjusted EBITDA increased by approximately $28.0 million to $191.5 million for the three month period ended June 30, 2023, as compared to $163.5 million for the same period in 2022. The increase in Adjusted EBITDA was primarily due to a $66.2 million increase in time charter and voyage revenues. The above increase was partially mitigated by : (i) a $20.3 million increase in time charter and voyage expenses, mainly due to the increase in (a) bunker expenses arising from the increased number of freight voyages in the second quarter of 2023 and (b) bareboat and charter-in hire expense of the tanker and drybulk fleet primarily due to the expansion of our fleet; (ii) an $8.6 million increase in vessel operating expenses in accordance with our Management Agreements, mainly due to the expansion of our fleet; (iii) a $6.3 million increase in general and administrative expenses in accordance with our Administrative Services Agreement, mainly due to the expansion of our fleet; (iv) a $1.7 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items; and (v) a $1.3 million increase in other expenses, net.
EBITDA for the six month period ended June 30, 2023 and 2022 was affected by the items described in the table above. Excluding these items, Adjusted EBITDA increased by approximately $57.2 million to $346.8 million for the six month period ended June 30, 2023, as compared to $289.6 million for the same period in 2022. The increase in Adjusted EBITDA was primarily due to a $139.2 million increase in time charter and voyage revenues. The above increase was partially mitigated by : (i) a $42.8 million increase in time charter and voyage expenses, mainly due to the increase in (a) bunker expenses arising from the increased number of freight voyages in the second quarter of 2023 and (b) bareboat and charter-in hire expense of the tanker and drybulk fleet primarily due to the expansion of our fleet; (ii) an $18.6 million increase in vessel operating expenses in accordance with our Management Agreements, mainly due to the expansion of our fleet; (iii) an $11.9 million increase in general and administrative expenses in accordance with our Administrative Services Agreement, mainly due to the expansion of our fleet; (iv) a $6.4 million increase in other expenses, net; and (v) a $2.3 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items).
(2) Operating Surplus
Navios Partners generated Operating Surplus for the six month period ended June 30, 2023 of $164.4 million, as compared to $146.1 million for the six month period ended June 30, 2022. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus” contained herein).
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense, non-cash interest income, estimated maintenance and replacement capital expenditures and one-off items. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Partners’ capital assets.
Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
Capital Expenditures
Navios Partners finances its capital expenditures with cash flow from operations, equity raisings, long-term bank borrowings and other debt raisings. Capital expenditures for each of the six month periods ended June 30, 2023 and 2022 amounted to $184.1 million and $61.9 million, respectively.
Maintenance for our vessels and expenses related to drydocking expenses are reimbursed at cost by Navios Partners to Navios Shipmanagement Inc., (the “Manager”) and Navios Tankers Management Inc. (“Tankers Manager” and together with the Manager, the “Managers”) under the Management Agreements.
Maintenance and Replacement Capital Expenditures Reserve
The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2023 were $56.7 million and $113.0 million, respectively. The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2022 were $59.0 million and $118.1 million, respectively. We estimate that our annual replacement reserve for the year ending December 31, 2023 will be approximately $225.2 million, for replacing our vessels at the end of their useful lives.
The amount for estimated replacement capital expenditures attributable to future vessel replacement was based on the following assumptions: (i) current market price to purchase a five year old vessel of similar size and specifications; (ii) a 25-year useful life for drybulk and tanker vessels and a 30-year useful life for containerships; and (iii) a relative net investment rate.
The amount for estimated maintenance capital expenditures attributable to future vessel drydocking and special survey was based on certain assumptions including the remaining useful life of the owned vessels of our fleet, market costs of drydocking and special survey and a relative net investment rate.
Our Board of Directors, with the approval of the Conflicts Committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase or decrease the amount of estimated maintenance and replacement capital expenditures. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units, which could be dilutive to existing unitholders.
Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy
There is no guarantee that unitholders will receive quarterly distributions from us on the common units on any quarter.
Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.
See Note 13 – Cash distributions and earnings per unit to the unaudited condensed consolidated financial statements included elsewhere in this Report.
Quantitative and Qualitative Disclosures about Market Risks
Foreign Exchange Risk
Our functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than U.S. dollars are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized.
Interest Rate Risk
Interest rates have increased significantly as central banks in Europe, United States and other developed countries raise interest rates in an effort to reduce the inflation effect. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our Company.
Borrowings under our credit facilities and financial liabilities bear interest at a rate based on a premium over U.S. LIBOR or Secured Overnight Financing Rate (“SOFR”). Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the six month periods ended June 30, 2023 and 2022, we paid interest on our outstanding debt at a weighted average interest rate of 7.20% and 3.98%, respectively. A 1% increase in LIBOR or SOFR would have increased our interest expense for the six month periods ended June 30, 2023 and 2022 by $7.3 million and $5.9 million, respectively.
Concentration of Credit Risk
Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. We closely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history.
For the six month period ended June 30, 2023, no customer accounted for 10% or more of our total revenues. For the six month period ended June 30, 2022, Singapore Marine represented approximately 10.8% of total revenues. No other customers accounted for 10% or more of total revenues for any of the periods presented.
If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most charters and the cyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorable than the charter that has been terminated. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not receive any revenues from that vessel, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition. If we lose a vessel, any replacement or newbuilding would not generate revenues during its construction acquisition period, and we may be unable to charter any replacement vessel on terms as favorable to us as those of the terminated charter.
Even if we successfully charter our vessels in the future, our charterers may go bankrupt or fail to perform their obligations under the charter agreements, they may delay payments or suspend payments altogether, they may terminate the charter agreements prior to the agreed-upon expiration date or they may attempt to renegotiate the terms of the charters. The permanent loss of a customer, time charter or vessel, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace such customer, time charter or vessel. For further details, please read “Risk Factors” in our 2022 Annual Report filed on Form 20-F with the SEC on March 24, 2023.
Recent Accounting Pronouncements
The Company’s recent accounting pronouncements are included in the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this Report.
Critical Accounting Policies
Our financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Actual results may differ from these estimates under different assumptions or conditions.
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 Note 2-Summary of Significant Accounting Policies to the notes to the consolidated financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2022 filed with the SEC on March 24, 2023 and in Note 2-Summary of Significant Accounting Policies included in the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this Report.
Exhibit List
* | Filed herewith |
INDEX
Table of Contents | F- 1 |
NAVIOS MARITIME PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS BALANCE SHEETS |
(Expressed in thousands of U.S. Dollars except unit data)
Notes | June 30, 2023 (unaudited) |
December 31, 2022 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | 3 | $ | $ | ||||
Restricted cash | 3 | ||||||
Accounts receivable, net | |||||||
Amounts due from | 12 | ||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Vessels, net | 4 | ||||||
Deposits for vessels acquisitions | 11 | ||||||
Other long-term assets | 11 | ||||||
Deferred dry dock and special survey costs, net | |||||||
Amounts due from related parties | 12 | ||||||
Intangible assets | 5 | ||||||
Operating lease assets | 14 | ||||||
Total non-current assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Current liabilities | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses | |||||||
Deferred revenue | |||||||
Operating lease liabilities, current portion | 14 | ||||||
Amounts due to | 12 | ||||||
Current portion of financial liabilities, net | 6 | ||||||
Current portion of long-term debt, net | 6 | ||||||
Total current liabilities | |||||||
Operating lease liabilities, net | 14 | ||||||
Unfavorable lease terms | 5 | ||||||
Long-term financial liabilities, net | 6 | ||||||
Long-term debt, net | 6 | ||||||
Deferred revenue | |||||||
Other long-term liabilities | |||||||
Total non-current liabilities | |||||||
Total liabilities | $ | $ | |||||
Commitments and contingencies | 11 | ||||||
Partners’ capital: | |||||||
Common Unitholders ( units issued and outstanding at each of June 30, 2023 and December 31, 2022) | 1, 8 | ||||||
General Partner ( units issued and outstanding at each of June 30, 2023 and December 31, 2022) | 1, 8 | ||||||
Total partners’ capital | |||||||
Total liabilities and partners’ capital | $ | $ |
See unaudited notes to the condensed consolidated financial statements
Table of Contents | F- 2 |
NAVIOS MARITIME PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Expressed in thousands of U.S. Dollars except unit data)
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||||||
Notes | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Time charter and voyage revenues | 2, 9, 14 | $ | $ | $ | $ | ||||||||
Time charter and voyage expenses | 14 | ( |
( |
( |
( | ||||||||
Direct vessel expenses | 12 | ( |
( |
( |
( | ||||||||
Vessel operating expenses (entirely through related parties transactions) | 12 | ( |
( |
( |
( | ||||||||
General and administrative expenses | 12 | ( |
( |
( |
( | ||||||||
Depreciation and amortization of intangible assets | 4, 5 | ( |
( |
( |
( | ||||||||
Amortization of unfavorable lease terms | 5 | ||||||||||||
Gain on sale of vessels, net | 4 | ||||||||||||
Interest expense and finance cost, net | 6 | ( |
( |
( |
( | ||||||||
Interest income | |||||||||||||
Other expense, net | ( |
( |
( |
( | |||||||||
Net income | $ | $ | $ | $ |
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||
Common Unitholders | $ | $ | $ | $ | |||||||||
General Partner | |||||||||||||
Net income | $ | $ | $ | $ |
Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||||||
Earnings per unit (see Note 13): | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Earnings per common unit, basic | $ | $ | $ | $ | |||||||||
Earnings per common unit, diluted | $ | $ | $ | $ |
See unaudited notes to the condensed consolidated financial statements
Table of Contents | F- 3 |
NAVIOS MARITIME PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Expressed in thousands of U.S. Dollars except unit data)
Six Month Period Ended June 30, 2023 | Six Month Period Ended June 30, 2022 | ||||||
Notes | (unaudited) | (unaudited) | |||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of intangible assets | 4, 5 | ||||||
Amortization of unfavorable lease terms | 5 | ( |
( | ||||
Non-cash amortization of deferred revenue and straight line | |||||||
Amortization of operating lease assets/ liabilities | 14 | ( | |||||
Amortization and write-off of deferred finance costs and discount | |||||||
Amortization of deferred dry dock and special survey costs | |||||||
Gain on sale of vessel, net | 4 | ( |
|||||
Stock-based compensation | 8 | ||||||
Changes in operating assets and liabilities: | |||||||
Decrease/ (increase) in accounts receivable | ( | ||||||
Decrease/ (increase) in prepaid expenses and other current assets | 15 | ( | |||||
Increase in amounts due from related parties | 12 | ( |
( | ||||
Payments for dry dock and special survey costs | ( |
( | |||||
(Decrease)/ increase in accounts payable | ( |
||||||
Increase in accrued expenses | |||||||
Increase in deferred revenue | |||||||
Decrease in amounts due to related parties | 12 | ( |
( | ||||
Net cash provided by operating activities | |||||||
INVESTING ACTIVITIES: | |||||||
Net cash proceeds from sale of vessels | 4 | ||||||
Deposits for acquisition/ option to acquire vessel | 11 | ( |
( | ||||
Acquisition of/ additions to vessels | 4,12 | ( |
( | ||||
Net cash provided by/ (used in) investing activities | ( | ||||||
FINANCING ACTIVITIES: | |||||||
Cash distributions paid | 13 | ( |
( | ||||
Repayment of long-term debt and financial liabilities | 6 | ( |
( | ||||
Payments of deferred finance costs | 6 | ( |
( | ||||
Proceeds from long-term debt and financial liabilities | 6 | ||||||
Net cash used in financing activities | ( |
( | |||||
Increase in cash, cash equivalents and restricted cash | |||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ |
See unaudited notes to the condensed consolidated financial statements
Table of Contents | F- 4 |
NAVIOS MARITIME PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Expressed in thousands of U.S. Dollars except unit data)
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||
(unaudited) | (unaudited) | ||||||
Supplemental disclosures of cash flow information | |||||||
Cash interest paid | $ | $ | |||||
Non cash financing activities | |||||||
Stock-based compensation | $ | $ | |||||
Financial and finance lease liabilities | $ | $ | |||||
Non cash investing activities | |||||||
Acquisition of vessels | $ | ( |
$ | ||||
Deposits for acquisition/ option to acquire vessel (see Note 11) | $ | $ |
See unaudited notes to the condensed consolidated financial statements
Table of Contents | F- 5 |
NAVIOS MARITIME PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER’S CAPITAL |
(Expressed in thousands of U.S. Dollars except unit data)
Limited Partners | ||||||||||||
General Partner | Common Unitholders | |||||||||||
Units | Amount | Units | Amount | Total Partners’ Capital | ||||||||
Balance, December 31, 2022 | $ | $ | $ | |||||||||
Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||
Stock based compensation (see Note 8) | — | — | ||||||||||
Net income | — | — | ||||||||||
Balance, March 31, 2023 | $ | $ | $ | |||||||||
Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||
Stock based compensation (see Note 8) | — | — | ||||||||||
Net income | — | — | ||||||||||
Balance, June 30, 2023 | $ | $ | $ |
Limited Partners | ||||||||||||
General Partner | Common Unitholders | |||||||||||
Units | Amount | Units | Amount | Total Partners’ Capital | ||||||||
Balance, December 31, 2021 | $ | $ | $ | |||||||||
Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||
Stock based compensation (see Note 8) | — | — | ||||||||||
Net income | — | — | ||||||||||
Balance, March 31, 2022 | $ | $ | $ | |||||||||
Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||
Stock based compensation (see Note 8) | — | — | ||||||||||
Net income | — | — | ||||||||||
Balance, June 30, 2022 | $ | $ | $ |
See unaudited notes to the condensed consolidated financial statements
Table of Contents | F- 6 |
NAVIOS MARITIME PARTNERS L.P.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in thousands of U.S. Dollars except unit data)
NOTE 1 – DESCRIPTION OF BUSINESS
Navios Maritime Partners L.P. (“Navios Partners” or the “Company”), is an international owner and operator of dry cargo and tanker vessels, formed on
Navios Partners is engaged in the seaborne transportation services of a wide range of liquid and dry cargo commodities including crude oil, refined petroleum, chemicals, iron ore, coal, grain, fertilizer and also containers, chartering its vessels under short, medium and longer-term charters. The operations of Navios Partners are managed by Navios Shipmanagement Inc., (the “Manager”) and Navios Tankers Management Inc. (“Tankers Manager” and together with the Manager, the “Managers”) which are entities affiliated with the Company’s Chairwoman and Chief Executive Officer (see Note 12 – Transactions with related parties and affiliates).
As of June 30, 2023, there were
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation: The accompanying interim condensed consolidated financial statements are unaudited, but, in the opinion of management, reflect all adjustments for a fair statement of Navios Partners’ consolidated balance sheets, statement of partners’ capital, statements of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of results for the full year. The footnotes are condensed as permitted by the requirements for interim financial statements and accordingly, do not include information and disclosures required under United States generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. All such adjustments are deemed to be of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes included in Navios Partners’ Annual Report for the year ended December 31, 2022 filed on Form 20-F on March 24, 2023 with the U.S. Securities and Exchange Commission (“SEC”).
Based on internal forecasts and projections that take into account reasonably possible changes in Company’s trading performance, management believes that the Company has adequate financial resources, including cash from sale of vessels, (see Note 4 – Vessels) 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 these condensed consolidated financial statements. Accordingly, the Company continues to adopt the going concern basis in preparing its financial statements.
Following Russia’s invasion of Ukraine in February 2022 the United States, the European Union, the United Kingdom and other countries have announced sanctions against Russia, and may impose wider sanctions and take other actions in the future. To date, no apparent consequences have been identified on the Company’s business. It should be noted that since the Company employs Ukrainian and Russian seafarers, it may face problems in relation to their employment, repatriation, salary payments and be subject to claims in this regard. Notwithstanding the foregoing, it is possible that these tensions might eventually have an adverse impact on our business, financial condition, results of operations and cash flows.
Interest rates have increased significantly as central banks in Europe, United States and other developed countries raise interest rates in an effort to reduce the inflation effect. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for the Company.
(b) Principles of consolidation: The accompanying interim condensed consolidated financial statements include Navios Partners’ wholly owned subsidiaries incorporated under the laws of the Republic of Marshall Islands, Liberia, Malta, Delaware, Cayman Islands, Hong Kong, British Virgin Islands, Luxemburg and Belgium from their dates of incorporation or from the date of acquiring control or, for chartered-in vessels, from the dates charter-in agreements were in effect. All significant inter-company balances and transactions have been eliminated in Navios Partners’ consolidated financial statements.
Table of Contents | F- 7 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
Navios Partners also consolidates entities that are determined to be variable interest entities (“VIE”) as defined in the accounting guidance, if it determines that it is the primary beneficiary. A VIE is defined as a legal entity where either (i) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, (ii) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.
Subsidiaries: Subsidiaries are those entities in which Navios Partners has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies of the entity.
A discussion of the Company’s significant accounting policies can be found in Note 2 to the Company’s consolidated financial statements included in the Annual Report filed on Form 20-F on March 24, 2023 with the SEC for the year ended December 31, 2022. There have been no material changes to these policies in the six months ended June 30, 2023, apart from those discussed below.
As of June 30, 2023, the Company has elected one of the optional expedients provided in the ASU 2020-04 Reference Rate Reform and its update that allows entities with contract modifications within the scope of Topic 470, for which the terms that are modified solely relate to directly replacing, or having the potential to replace a reference rate with another interest rate index, to account for the modification that meets the scope of paragraphs 848-20-15-2 through 15-3 as if the modification was not substantial. That is, the original contract and the new contract shall be accounted for as if they were not substantially different from one another, and the modification shall not be accounted for in the same manner as a debt extinguishment. As of June 30, 2023, the Company has entered into certain amendments in the existing loan agreements in order to replace the reference rate from Libor to Secured Overnight Financing Rate (“SOFR”). The Company will continue to evaluate the potential impact of adopting the standards on its consolidated financial statements.
(c) Revenue and Expense Recognition:
Revenue from time chartering
Revenues from time chartering and bareboat chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average lease revenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. The Company has determined to recognize lease revenue as a combined single lease component for all time charters (operating leases) as the related lease component and non-lease components will have the same timing and pattern of the revenue recognition of the combined single lease component. The performance obligations in a time charter contract are satisfied over term of the contract beginning when the vessel is delivered to the charterer until it is redelivered back to the Company. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel. Revenue from time chartering and bareboat chartering of vessels amounted to $
Revenue from voyage contracts
Under a voyage charter, a vessel is provided for the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo. Upon adoption of ASC 606, the Company recognizes revenue ratably from port of loading to when the charterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” and relate directly to the contract. Revenue from voyage contracts amounted to $
Pooling arrangements
For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is
Table of Contents | F- 8 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
accounted for as variable rate operating leases on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured. The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material. The Company recognizes net pool revenue on a monthly and quarterly basis, when the vessel has participated in a pool during the period and the amount of pool revenue can be estimated reliably based on the pool report. Revenue from vessels operating in pooling arrangements amounted to $
Revenue from profit-sharing
Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly or semi-annual basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit sharing elements, these are accounted for on the actual cash settlement or when such revenue becomes determinable. Profit-sharing revenue amounted to $
Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Recent Accounting Pronouncements:
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Partners’ Annual Report on Form 20-F for the year ended December 31, 2022.
NOTE 3 – CASH AND CASH EQUIVALENTS
June 30, 2023 | December 31, 2022 | ||||
Cash and cash equivalents | $ | $ | |||
Restricted cash | |||||
Total cash and cash equivalents and restricted cash | $ | $ |
As of June 30, 2023 and December 31, 2022, restricted cash amounted to $
Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government-provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.
NOTE 4 – VESSELS, NET
Total Vessels | Cost | Accumulated Depreciation |
Net Book Value | |||||
Balance December 31, 2022 | $ | $ | ( |
$ | ||||
Additions/ (Depreciation) | ( |
|||||||
Disposals | ( |
( | ||||||
Balance June 30, 2023 | $ | $ | ( |
$ |
Table of Contents | F- 9 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
The above balances as of June 30, 2023 are analyzed in the following tables:
Owned Vessels | Cost | Accumulated Depreciation |
Net Book Value | |||||
Balance December 31, 2022 | $ | $ | ( |
$ | ||||
Additions/ (Depreciation) | ( |
|||||||
Disposals | ( |
( | ||||||
Balance June 30, 2023 | $ | $ | ( |
$ |
Right-of-use assets under finance Lease | Cost | Accumulated Depreciation |
Net Book Value | |||||
Balance December 31, 2022 | $ | $ | ( |
$ | ||||
Additions/ (Depreciation) | ( |
|||||||
Transfers to owned vessels | ( |
( | ||||||
Balance June 30, 2023 | $ | $ | ( |
$ |
Right-of-use asset under finance leases are calculated at an amount equal to the finance liability, increased with the allocated excess value, the initial direct costs and adjusted for the carrying amount of the straight-line effect of liability as well as the favorable and unfavorable lease terms derived from charter-in agreements. Following the declaration of the Company’s option to extend the charter period of the Navios Amber for one year commencing in May 2023, the corresponding right-of-use asset under finance lease was increased by $
, upon remeasurement of the finance lease liability, to $ (see Note 6 – Borrowings).During the six month periods ended June 30, 2023 and 2022, the Company capitalized certain extraordinary fees and costs related to vessels’ regulatory requirements, including ballast water treatment system installation, exhaust gas cleaning system installation, scrubber system installation, and other improvements that amounted to $
Acquisition of Vessels
2023
On June 21, 2023, Navios Partners took delivery of the Navios Amethyst, a
-built vessel of dwt, from an unrelated third party, by entering into a 15-year bareboat charter-in agreement which provides for purchase options with de-escalating purchase prices. Navios Partners accounted for the bareboat charter-in agreement as a finance lease, and recognized a right of use asset at $ , being an amount equal to the initial measurement of the finance lease liability (see Note 6- Borrowings) increased by the amount of $ , which was prepaid before the lease commencement.On April 27, 2023, Navios Partners took delivery of the Navios Sakura, a
-built vessel of dwt , from an unrelated third party by entering into a 15-year bareboat charter-in agreement which provides for purchase options with de-escalating purchase prices. Navios Partners accounted for the bareboat charter-in agreement as a finance lease, and recognized a right of use asset at $ , being an amount equal to the initial measurement of the finance lease liability (see Note 6- Borrowings) increased by the amount of $ , which was prepaid before the lease commencement.On March 29, 2023, Navios Partners took delivery of the Navios Altair, a
-built vessel of dwt, from an unrelated third party, by entering into a 15-year bareboat charter-in agreement which provides for purchase options with de-escalating purchase prices. Navios Partners accounted for the bareboat charter-in agreement as a finance lease, and recognized a right-of-use asset at $ being an amount equal to the initial measurement of the finance lease liability (see Note 6 – Borrowings) increased by the amount of $ , which was prepaid before the lease commencement.On March 6, 2023, Navios Partners paid an amount of $
(including $ related to the scrubber system installation) and acquired from an unrelated third party, the Navios Felix, a -built scrubber-fitted vessel of dwt, which was previously accounted for as a right-of-use asset under a finance lease. At the same date, the Company derecognized the right-of-use asset under finance lease and recognized the vessel at an aggregate cost of $ .
Table of Contents | F- 10 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
On February 5, 2023, Navios Partners took delivery of the Navios Meridian, a
-built vessel of dwt, from an unrelated third party, for an acquisition cost of $ .Sale of Vessels
2023
On May 16, 2023, Navios Partners sold the Serenitas N, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On May 4, 2023, Navios Partners sold the Navios Libertas, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On May 3, 2023, Navios Partners sold the Navios Anthos, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On April 5, 2023, Navios Partners sold the Aurora N, a
-built Product Tanker vessel of dwt, to an unrelated third party, for a net sales price of $ .On March 3, 2023, Navios Partners sold the Nave Photon, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On February 7, 2023, Navios Partners sold the Navios Prosperity I, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On February 3, 2023, Navios Partners sold the Jupiter N, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On January 26, 2023, Navios Partners sold the Star N, a
-built Product Tanker vessel of dwt, to an unrelated third party, for a net sales price of $ .On January 26, 2023, Navios Partners sold the Navios Amaryllis, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On January 24, 2023, Navios Partners sold the Nave Polaris, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .On January 17, 2023, Navios Partners sold the Nave Dorado, a
-built Product Tanker vessel of dwt, to an unrelated third party, for a net sales price of $ .On January 9, 2023, Navios Partners sold the Nave Cosmos, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ .Following the sale of the above vessels during the six month period ended June 30, 2023, the aggregate amount of $
Vessels agreed to be sold
On May 10, 2023, Navios Partners agreed to sell the Lumen N, a
-built vessel of dwt, to an unrelated third party, for a net sales price of $ . The sale was completed on July 7, 2023. The aggregate net carrying amount of the vessel amounted to $ at the date of the sale. The vessel was subject to an existing time charter with an unrelated charterer and was not immediately available for sale and therefore, did not qualify as an asset held for sale as of June 30, 2023.NOTE 5 – INTANGIBLE ASSETS AND LIABILITIES
Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:
Table of Contents | F- 11 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
Cost | Accumulated Amortization |
Net Book Value | ||||||
Favorable lease terms December 31, 2022 | $ | $ | ( |
$ | ||||
Amortization | ( |
( | ||||||
Favorable lease terms June 30, 2023 | $ | $ | ( |
$ |
Amortization expense of favorable lease terms for each of the periods ended June 30, 2023 and 2022 is presented in the following table:
Three Month Period Ended |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||
Favorable lease terms | $ | ( |
$ | ( |
$ | ( |
$ | ( | |||
Total | $ | ( |
$ | ( |
$ | ( |
$ | ( |
The aggregate amortization of the intangible assets for the 12-month periods ending June 30 for the following years is estimated to be as follows:
Period |
Amount | ||
2024 | $ | ||
2025 | |||
2026 | |||
2027 | |||
2028 | |||
2029 and thereafter | |||
Total | $ |
Intangible assets subject to amortization are amortized using
Intangible liabilities as of June 30, 2023 and December 31, 2022 consisted of the following:
Cost | Accumulated Amortization |
Net Book Value | ||||||
Unfavorable lease terms December 31, 2022 | $ | ( |
$ | $ | ( | |||
Amortization | ||||||||
Unfavorable lease terms June 30, 2023 | $ | ( |
$ | $ | ( |
Amortization income of unfavorable lease terms for each of the periods ended June 30, 2023 and 2022 is presented in the following table:
Three Month Period Ended |
Three Month Period Ended |
Six Month Period Ended |
Six Month Period Ended | ||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||
Unfavorable lease terms | $ | $ | $ | $ | |||||||
Total | $ | $ | $ | $ |
The aggregate amortization of the intangible liabilities for the 12-month periods ending June 30 is estimated to be as follows:
Table of Contents | F- 12 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
Period |
Amount | ||
2024 | $ | ||
2025 | |||
2026 | |||
2027 | |||
2028 | |||
2029 and thereafter | |||
Total | $ |
Intangible liabilities subject to amortization are amortized using
NOTE 6 – BORROWINGS
Borrowings as of June 30, 2023 and December 31, 2022 consisted of the following:
June 30, 2023 | December 31, 2022 | ||||
Credit facilities | $ | $ | |||
Financial liabilities | |||||
Finance lease liabilities | |||||
Total borrowings | $ | $ | |||
Less: Current portion of long-term borrowings, net | ( |
( | |||
Less: Deferred finance costs, net | ( |
( | |||
Long-term borrowings, net | $ | $ |
As of June 30, 2023, the total borrowings, net of deferred finance costs were $1,924,703.
Credit Facilities
FIRST-CITIZENS BANK & TRUST COMPANY: On
DNB BANK ASA: On February 16, 2023, Navios partners entered into a credit facility with DNB Bank ASA for a total amount up to $
SKANDINAVISKA ENSKILDA BANKEN AB : On April 19, 2023, Navios Partners entered into a credit facility with Skandinaviska Enskilda Banken AB of up to $
in order . On April 21, 2023, the full amount was drawn. As of June 30, 2023, the total outstanding balance was $ and is repayable in consecutive installments of $ each, with a final balloon installment of $ to be paid on the last repayment date. The facility matures in the and bears interest at plus bps per annum.KFW IPEX-BANK GMBH: On April 25, 2023, Navios Partners entered into an export agency-backed facility with KFW IPEX-BANK GMBH (“KFW”) for a total amount of up to $
EUROBANK S.A: On May 2, 2023, Navios Partners entered into a credit facility with Eurobank S.A of up to $
BNP PARIBAS: On June 12, 2023, Navios Partners entered into a credit facility with BNP Paribas of up to $
On June 21, 2023, Navios Partners entered into a credit facility with BNP Paribas and Credit Agricole Corporate and Investment Bank of up to $
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corporate purposes. On June 26, 2023, the full amount was drawn. As of June 30, 2023, the total outstanding balance was $
NATIONAL BANK OF GREECE S.A: On June 20, 2023, Navios Partners entered into credit facility with National Bank of Greece S.A of up to $
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK: On June 28, 2023, Navios Partners entered into credit facility with Credit Agricole Corporate and Investment Bank of up to $
Financial Liabilities
In
, the Company entered into a sale and leaseback agreement of $ with an unrelated third party for the Navios Meridian, a newbuilding vessel of dwt. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. In January 2022, Navios Partners declared its option to purchase the vessel at the end of the tenth year of the bareboat charter-in agreement, preserving the right to exercise the purchase option earlier during the option period. Under ASC 842-40, the transfer of the vessel was determined to be a failed sale. In February 2023, Navios Partners took delivery of the Navios Meridian and recognized an amount of $27,440 as financial liability in accordance with ASC 842-40. Navios Partners is obliged to make consecutive payments of $ each that commenced in February 2023. The sale and leaseback transaction matures in the , with a purchase obligation of $ on the last repayment date and bears interest at plus bps per annum. As of June 30, 2023, the outstanding balance under the sale and leaseback agreement was $ .In
, the Company entered into a sale and leaseback agreement of $ with an unrelated third party, in order to finance the Navios Felix, a -built vessel of dwt. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. Navios Partners has a purchase option of $ to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, the transaction was determined to be a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. On March 10, 2023, the amount of $32,000 was drawn. Navios Partners is obligated to make consecutive payments of $ each that commenced in March 2023. The sale and leaseback transaction matures in the and bears interest at plus bps per annum. As of June 30, 2023, the outstanding balance under the sale and leaseback agreement was $ .In
Finance Lease Liabilities
On
, Navios Partners took delivery of the Navios Amber, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. During the first half of 2023, the Company declared its option to extend the charter period for one year commencing in May 2023. Under the ASC 842, the extension of the charter period is considered as a lease modification. Consequently, the Company reallocated the remaining consideration in the contract and remeasured the finance lease liability by using the updated Company’s incremental borrowing rate of approximately %. The finance lease liability recognized at the date of modification was increased by $ . The corresponding right-of-use asset under finance lease was adjusted upon remeasurement of the finance lease liability (see Note 4 – Vessels, net). As of June 30, 2023, the outstanding balance was $ and is repayable in one year in consecutive installments up to $ each, with a purchase option of $ .Table of Contents | F- 14 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
On
, Navios Partners took delivery of the Navios Altair, a -built vessel of dwt under a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the agreement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value of the charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of June 30, 2023, the outstanding balance was $ and is repayable in years in consecutive installments up to $ each, with a purchase option of $ , assuming that the option will be exercised at the end of the agreement.On
, Navios Partners took delivery of the Navios Sakura, a -built vessel of dwt, under a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting at the end of the fourth year. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the agreement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value of the charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of June 30, 2023, the outstanding balance was $ and is repayable in years in consecutive installments up to $ each, with a purchase option of $ , assuming that the option will be exercised at the end of the agreement.On
, Navios Partners took delivery of the Navios Amethyst, a -built vessel of dwt, under a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the agreement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value of the charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of June 30, 2023, the outstanding balance was $ and is repayable in years in consecutive installments up to $ each, with a purchase option of $ , assuming that the option will be exercised at the end of the agreement.The Company recognizes the total interest expense incurred on finance lease liabilities under the caption “Interest expense and finance cost, net” in the condensed Consolidated Statements of Operations. As of each of the three and six month periods ended June 30, 2023, the total interest expense incurred amounted to $
Credit Facilities and Financial Liabilities
The credit facilities and certain financial liabilities contain a number of restrictive covenants that prohibit or limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technical management of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; not maintaining Navios Holdings’, Angeliki Frangou’s or their affiliates’ ownership in Navios Partners of at least 5.0%; and subordinating the obligations under the credit facilities to any general and administrative costs related to the vessels, including the fixed daily fee payable under the Management Agreements (defined herein).
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As of June 30, 2023 and December 31, 2022, the security deposits under certain sale and leaseback agreements were $
It is an event of default under the credit facilities and certain financial liabilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.
The annualized weighted average interest rates of the Company’s total borrowings for the three and six month periods ended June 30, 2023 were
The maturity table below reflects the principal payments for the next five 12-month periods ending June 30 of the following years and thereafter of all borrowings of Navios Partners outstanding as of June 30, 2023, based on the repayment schedules of the respective credit facilities, financial liabilities and finance lease liabilities.
Period |
Amount | ||
2024 | $ | ||
2025 | |||
2026 | |||
2027 | |||
2028 | |||
2029 and thereafter | |||
Total | $ |
NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value amounts of many of Navios Partners’ financial instruments, including accounts receivable and accounts payable approximate their fair value due primarily to the short-term maturity of the related instruments.
Fair value of financial instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents: The carrying amounts reported in the condensed Consolidated Balance Sheets for interest bearing deposits approximate their fair value because of the short maturity of these deposits.
Restricted Cash: The carrying amounts reported in the condensed Consolidated Balance Sheets for interest bearing deposits approximate their fair value because of the short maturity of these deposits.
Amounts due from related parties, long-term: The carrying amount of due from related parties long-term reported in the condensed Consolidated Balance Sheets approximates its fair value.
Amounts due from related parties, short-term: The carrying amount of due from related parties short-term reported in the condensed Consolidated Balance Sheets approximates its fair value due to the short-term nature of these receivables.
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Amounts due to related parties, short-term: The carrying amount of due to related parties, short-term reported in the condensed Consolidated Balance Sheets approximates its fair value due to the short-term nature of these payables.
Credit facilities and financial liabilities, including current portion, net: The book value has been adjusted to reflect the net presentation of deferred finance costs. The outstanding balance of the floating rate credit facilities and financial liabilities continues to approximate its fair value, excluding the effect of any deferred finance costs.
The estimated fair values of the Navios Partners’ financial instruments are as follows:
June 30, 2023 | December 31, 2022 | ||||||||||
Book Value | Fair Value | Book Value | Fair Value | ||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||
Restricted cash | $ | $ | $ | $ | |||||||
Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
Amounts due from related parties, short-term | $ | $ | $ | $ | |||||||
Amounts due to related parties, short-term | $ | $ | $ | ( |
$ | ( | |||||
Credit facilities and financial liabilities, including current portion, net | $ | ( |
$ | ( |
$ | ( |
$ | ( |
Fair Value Measurements
The estimated fair value of the Company’s financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:
Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs that are unobservable. The Company did not use any Level III inputs as of June 30, 2023 and December 31, 2022.
Fair Value Measurements as at June 30, 2023 | |||||||||||
Total | Level I | Level II | Level III | ||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||
Restricted cash | $ | $ | $ | $ | |||||||
Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
Amounts due from related parties, short-term | $ | $ | $ | $ | |||||||
Credit facilities and financial liabilities, net (1) | $ | ( |
$ | $ | ( |
$ |
Fair Value Measurements as at December 31, 2022 | |||||||||||
Total | Level I | Level II | Level III | ||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||
Restricted cash | $ | $ | $ | $ | |||||||
Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
Amounts due to related parties, short-term | $ | ( |
$ | $ | ( |
$ | |||||
Credit facilities and financial liabilities, net (1) | $ | ( |
$ | $ | ( |
$ |
(1) |
The estimated fair value of the Company’s assets measured at fair value on a non-recurring basis, is based on the concluded sales price and is categorized based upon the fair value hierarchy as follows:
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Fair Value Measurements as at December 31, 2022 | |||||||||||
Total | Level I | Level II | Level III | ||||||||
Vessels, net | $ | $ | $ | $ |
NOTE 8 – REPURCHASES AND ISSUANCE OF UNITS
In July 2022, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $
The effect of compensation expense arising from the restricted common units granted in December 2019 and 2018 and February 2019, amounted to $
and $ for the three and six month periods ended June 30, 2023, respectively, and was presented under the caption “General and administrative expenses” in the condensed Consolidated Statements of Operations.The effect of compensation expense arising from the restricted common units granted in December 2019 and 2018 and February 2019, amounted to $
and $ for the three and six month periods ended June 30, 2022, respectively, and was presented under the caption “General and administrative expenses” in the condensed Consolidated Statements of Operations.As of June 30, 2023, the estimated compensation cost related to service conditions of non-vested restricted common units granted in 2019 not yet recognized was $
.As of each of June 30, 2023 and December 31, 2022, there were
restricted common units outstanding that remained unvested.NOTE 9 – SEGMENT INFORMATION
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.
Navios Partners reports financial information and evaluates its operations by charter revenues. Navios Partners does not use discrete financial information to evaluate operating results for each type of charter or by sector. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet as a whole, determining where to allocate resources and drive business forward by examining consolidated results. Thus Navios Partners has determined that it operates under one reportable segment.
The following table sets out operating revenue by geographic region for Navios Partners’ reportable segment. Revenue is allocated on the basis of the geographic region in which the customer is located. Drybulk, Containerships and Tankers operate worldwide. Revenues from specific geographic region, which contribute over 10.0% of total revenue, are disclosed separately.
Revenue by Geographic Region
Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations to specific countries.
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Three Month Period Ended June 30, 2023 |
Three Month Period Ended June 30, 2022 |
Six Month Period Ended June 30, 2023 |
Six Month Period Ended June 30, 2022 | ||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||
Asia | $ | $ | $ | $ | |||||||
Europe | |||||||||||
America | |||||||||||
Total | $ | $ | $ | $ |
NOTE 10 – INCOME TAXES
The Republic of the Marshall Islands does not impose a tax on international shipping income. Under the laws of the Marshall Islands, Liberia, Cayman Islands, Hong Kong, British Virgin Islands Panama and Belgium, the countries of the vessel-owning subsidiaries’ incorporation and/or vessels’ registration, the vessel-owning subsidiaries are subject to registration and tonnage taxes, which have been included in vessel expenses in the accompanying condensed Consolidated Statements of Operations.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having established an office in Greece on the basis of the applicable licensing regime are subject to tax liability towards the Greek state, which is calculated on the basis of the relevant vessel’s tonnage. A tax credit is recognized for tonnage tax (or similar tax) paid abroad, up to the amount of the tax due in Greece.
The owner, the manager and the bareboat charterer or the financial lessee (where applicable) are liable to pay the tax due to the Greek state. The payment of said tax exhausts the tax liability of the foreign ship owning company, the bareboat charterer, the financial lessee (as applicable) and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel outside Greece.
We have elected to be treated and we are currently treated as a corporation for U.S. federal income tax purposes. As such, we are not subject to section 1446 as that section only applies to entities that for U.S. federal income tax purposes are characterized as partnerships.
Pursuant to Section 883 of the Internal Revenue Code of the United States, U.S. source income from the international operation of ships is generally exempt from U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. All the vessel-owning subsidiaries satisfy these initial criteria.
In addition, these companies must meet an ownership test. The management of Navios Partners believes that this ownership test was satisfied prior to the IPO by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company. Although not free from doubt, management also believes that the ownership test will be satisfied based on the trading volume and ownership of Navios Partners’ units, but no assurance can be given that this will remain so in the future.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Navios Partners is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in the financial statements for all such proceedings where Navios Partners believes that a liability may be probable, and for which the amounts are reasonably estimable, based upon facts known at the date the financial statements were prepared. Management believes the ultimate disposition of these matters will be immaterial individually and in the aggregate to Navios Partners’ financial position, results of operations or liquidity.
In November 2017, Navios Partners agreed to bareboat charter-in, under a
bareboat contract, from an unrelated third party, the Navios Libra, a newbuilding vessel of dwt, delivered on . Navios Partners agreed to pay in total $ , representing a deposit for the option to acquire the vessel after the end of the fourth year, of which the first half of $ was paid during the year ended December 31, 2017 and the second half of $ was paid during the year ended December 31, 2018. As of June 30, 2023, the total amount of $ , including expenses, is presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets.On October 18, 2019, Navios Partners agreed to bareboat charter-in, under a
bareboat contract each, from an unrelated third party, the Navios Amitie and the Navios Star, newbuilding vessels of dwt and dwt, respectively. The vessels were delivered in Navios Partner’s fleet on and ,Table of Contents | F- 19 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
respectively. Navios Partners has the option to acquire the vessels after the end of the fourth year for the remaining period of the bareboat charters. Navios Partners had agreed to pay in total $
, representing a deposit for the option to acquire the vessels after the end of the fourth year, of which $ was paid during the year ended December 31, 2019, $ was paid during the year ended December 31, 2020, and the remaining amount of $ was paid upon the delivery of the vessels. As of June 30, 2023, the total amount of $ , including expenses, is presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets.
On July 2, 2021, Navios Partners agreed to purchase
On October 1, 2021, Navios Partners exercised its option to acquire two
In November 2021, Navios Partners agreed to purchase four
In April 2022, Navios Partners agreed to purchase four
In June 2022, Navios Partners agreed to purchase two newbuilding liquefied natural gas (LNG) dual fuel
In November 2022, Navios Partners agreed to acquire two
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NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
and the remaining amount of $
In December 2022, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel is being bareboat-in for
During the second quarter of 2023, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel is being bareboat-in for
Upon acquisition of the majority of outstanding stock of Navios Maritime Acquisition Corporation (“Navios Acquisition”), Navios Partners assumed the following commitments:
In September 2018, Navios Acquisition agreed to a
bareboat charter-in agreement with de-escalating purchase options for the Baghdad and Erbil, newbuilding Japanese VLCCs of dwt and dwt, respectively. On , Navios Acquisition took delivery of the Baghdad. On , Navios Acquisition took delivery of the Erbil. As of June 30, 2023, the total amount of $ is presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets.In the first quarter of 2019, Navios Acquisition exercised its option to a
bareboat charter-in agreement with de-escalating purchase options for the Nave Electron, a newbuilding Japanese VLCC of dwt. On , Navios Partners took delivery of the Nave Electron. As of June 30, 2023, the total amount of $ is presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets.In the second quarter of 2020, Navios Acquisition exercised its option for the Nave Celeste, a newbuilding Japanese VLCC of
dwt under a bareboat charter agreement with de-escalating purchase options. On , Navios Partners took delivery of the Nave Celeste. As of June 30, 2023, the total amount of $ is presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets.As of June 30, 2023, an amount of $
As of June 30, 2023, the Company’s future minimum lease commitments under the Company’s bareboat-in contracts for undelivered vessels, are as follows:
Period ending June 30, |
Amount | ||
2024 | $ | ||
2025 | |||
2026 | |||
2027 | |||
2028 | |||
2029 and thereafter | |||
Total | $ |
NOTE 12 – TRANSACTIONS WITH RELATED PARTIES AND AFFILIATES
Vessel operating expenses: In August 2019, Navios Partners extended the duration of its management agreement (“Management Agreement”) with the Manager until January 1, 2025, with an automatic renewal for an additional five years, unless earlier terminated by either party.
Following the completion of the merger with Navios Maritime Containers L.P. (“Navios Containers”), the fleet of Navios Containers is included in Navios Partners’ owned fleet and continued to be operated by the Manager pursuant to the terms of the Navios Containers’ management agreement with the Manager (the “NMCI Management Agreement”).
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Following the completion of the merger with Navios Acquisition, the fleet of Navios Acquisition is included in Navios Partners’ owned fleet and continued to be operated by Tankers Manager pursuant to the terms of Navios Acquisition’s management agreement with Tankers Manager (the “NNA Management Agreement” and together with the Management Agreement and the NMCI Management Agreement, the “Management Agreements”).
The Management Agreements also provide for a technical and commercial management fee of $
per day per vessel and an annual increase of % of the fixed daily fee after January 1, 2022 for the remaining period unless agreed otherwise.Following completion of the mergers with Navios Containers and Navios Acquisition, the Managers provided commercial and technical management services to Navios Partners’ vessels until December 31, 2021 for a daily fee of: (a) $
Pursuant to the acquisition of the 36-vessel drybulk fleet from Navios Holdings, which includes time charter-in vessels, Navios Partners and the Manager, on July 25, 2022, amended the Management Agreement to include a technical and commercial management fee of $
per time charter-in vessel per day.Commencing from January 1, 2023 vessel operating expenses are fixed for one year for a daily fee of: (a) $
The Management Agreements also provide for payment of a termination fee, equal to the fees charged for the full calendar year preceding the termination date in the event the agreements are terminated on or before December 31, 2024.
Drydocking expenses are reimbursed at cost for all vessels.
During the three and six month periods ended June 30, 2023, certain extraordinary fees and costs related to vessels’ regulatory requirements, including ballast water treatment system installation, exhaust gas cleaning system installation, scrubber system installation, and other improvements under the Company’s Management Agreements, amounted to $
During the three and six month periods ended June 30, 2022 certain extraordinary fees and costs related to vessels’ regulatory requirements, including ballast water treatment system installation and exhaust gas cleaning system installation under Company’s Management Agreements, amounted to $
During three and six month periods ended June 30, 2023, certain extraordinary fees and costs related to COVID-19 measures, including crew related expenses, amounted to $
During the three and six month periods ended June 30, 2022, certain extraordinary fees and costs related to COVID-19 measures, including crew related expenses, amounted to $
Total vessel operating expenses for the three and six month periods ended June 30, 2023 amounted to $
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Total vessel operating expenses for the three and six month periods ended June 30, 2022 amounted to $
General and administrative expenses: Pursuant to the administrative services agreement (the “Administrative Services Agreement”), the Manager also provides administrative services to Navios Partners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other. Under the Administrative Services Agreement, which provide for allocable general and administrative costs, the Manager is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. In August 2019, Navios Partners extended the duration of its existing Administrative Services Agreement with the Manager until January 1, 2025, to be automatically renewed for another five years. The agreement also provides for payment of a termination fee, equal to the fees charged for the full calendar year preceding the termination date in the event the Administrative Services Agreement is terminated on or before December 31, 2024.
Total general and administrative expenses charged by the Manager for the three and six month periods ended June 30, 2023 amounted to $
and $ , respectively. Total general and administrative expenses charged by the Manager for the three and six month periods ended June 30, 2022 amounted to $ and $ , respectively.Balance due from/ (to) related parties: Balance due from related parties long-term as of June 30, 2023 and December 31, 2022 amounted to $
and $ , respectively. Balance due from related parties short-term as of June 30, 2023 and December 31, 2022 amounted to $ and $ , respectively. Balance due to related parties, short-term as of June 30, 2023 and December 31, 2022 amounted to $ and $ , respectively. The balances mainly consisted of administrative fees, drydocking, extraordinary fees and costs related to regulatory requirements including ballast water treatment system, other expenses, as well as fixed vessel operating expenses, in accordance with the Management Agreements.Others: Navios Partners has entered into an omnibus agreement with Navios Holdings (the “Partners Omnibus Agreement”) in connection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against each other as well as rights of first offer on certain drybulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquire or own Panamax or Capesize drybulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners. In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixed under time charters of three or more years.
General partner: Olympos Maritime Ltd., an entity affiliated to our Chairwoman and Chief Executive Officer, Angeliki Frangou, is the holder of Navios Partners’ general partner interest.
NOTE 13 – CASH DISTRIBUTIONS AND EARNINGS PER UNIT
The amount of distributions paid by Navios Partners and the decision to make any distribution is determined by the Company’s board of directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. There is no guarantee that the Company will pay the quarterly distribution on the common units in any quarter. The Company is prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default exists, under its existing credit facilities.
There are incentive distribution rights held by Navios GP L.L.C., which are analyzed as follows:
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Marginal Percentage Interest in Distributions | |||||||
Total Quarterly Distribution Target Amount | Common Unitholders |
Incentive Distribution Right Holder | General Partner | ||||
Minimum Quarterly Distribution | up to $ | ||||||
First Target Distribution | up to $ | ||||||
Second Target Distribution | above $ up to $ | ||||||
Third Target Distribution | above $up to $ | ||||||
Thereafter | above $ |
In January 2022, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended December 31, 2021 of $
In April 2022, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended March 31, 2022 of $
In January 2023, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended December 31, 2022 of $
In April 2023, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended March 31, 2023 of $
In July 2023, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended June 30, 2023 of $
Navios Partners calculates earnings per unit by allocating reported net income for each period to each class of units based on the distribution waterfall for available cash specified in Navios Partners’ partnership agreement, net of the unallocated earnings (or losses). Basic earnings per common unit is determined by dividing net income by the weighted average number of common units outstanding during the period. Diluted earnings per unit is calculated in the same manner as basic earnings per unit, except that the weighted average number of outstanding units increased to include the dilutive effect of outstanding unit options or phantom units. Net loss per unit undistributed is determined by taking the distributions in excess of net income and allocating between common units and general partnership units on a 98%-2% basis. There were no options or phantom units outstanding during each of the six month periods ended June 30, 2023 and 2022.
The calculations of the basic and diluted earnings per unit are presented below.
Three Month Period Ended | Three Month Period Ended | Six Month Period Ended | Six Month Period Ended | ||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||
Net income | $ | $ | $ | $ | |||||||
Income attributable to: | |||||||||||
Common unitholders | $ | $ | $ | $ | |||||||
Weighted average units outstanding basic | |||||||||||
Common unitholders | |||||||||||
Earnings per unit basic: | |||||||||||
Common unitholders | $ | $ | $ | $ | |||||||
Weighted average units outstanding diluted | |||||||||||
Common unitholders | |||||||||||
Earnings per unit diluted: | |||||||||||
Common unitholders | $ | $ | $ | $ | |||||||
Earnings per unit distributed basic: | |||||||||||
Common unitholders | $ | $ | $ | $ | |||||||
Earnings per unit distributed diluted: | |||||||||||
Common unitholders | $ | $ | $ | $ |
Table of Contents | F- 24 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
Potential common units of
and for the six month periods ended June 30, 2023 and 2022, respectively, are included in the calculation of earnings per unit diluted.NOTE 14 – LEASES
Time charter out contracts and pooling arrangements
The Company’s contract revenues from time chartering, bareboat chartering and pooling arrangements are governed by ASC 842.
Operating Leases
A discussion of the Company’s operating leases can be found in Note 22 – Leases to the Company’s consolidated financial statements included in the Annual Report filed on Form 20-F on March 24, 2023 with the SEC for the year ended December 31, 2022.
Based on management estimates and market conditions, the lease term of the leases is being assessed at each balance sheet date. At lease commencement, the Company determines a discount rate to calculate the present value of the lease payments so that it can determine lease classification and measure the lease liability. In determining the discount rate to be used at lease commencement, the Company used its incremental borrowing rate as there was no implicit rate included in charter-in contracts that can be readily determinable. The incremental borrowing rate is the rate that reflects the interest a lessee would have to pay to borrow funds on a collateralized basis over a similar term and in a similar economic environment. The Company then applies the respective incremental borrowing rate based on the remaining lease term of the specific lease. Navios Partners’ incremental borrowing rates were approximately
% for the Navios Libra and the Nave Celeste, % for the Navios Amitie and the Navios Star, % for the Baghdad, the Erbil, the Navios Horizon I, the Navios Gemini, the Navios Venus and the Navios Lyra, and % for the Nave Electron.
As of June 30, 2023 and December 31, 2022, the outstanding balance of the operating lease liability amounted to $
The Company recognizes the lease payments for its operating leases as charter hire expenses on a straight-line basis over the lease term. Lease expense incurred and paid for the three and six months period ended June 30, 2023 amounted to $
For the three and six month periods ended June 30, 2023, the sublease income (net of commissions, if any) for vessels where the Company is a lessee amounted to $
Table of Contents | F- 25 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
As of June 30, 2023, the weighted average useful life of the remaining operating lease terms was
The table below provides the total amount of lease payments on an undiscounted basis on the Company’s chartered-in contracts as of June 30, 2023:
Period ending June 30, | Amount | |
2024 | $ | |
2025 | ||
2026 | ||
2027 | ||
2028 | ||
2029 and thereafter | ||
Total | $ | |
Operating lease liabilities, including current portion | $ | |
Discount based on incremental borrowing rate | $ |
Finance Leases
For a detailed description of the finance lease liabilities and right-of-use assets for vessels under finance leases, refer to (i) Note 6 – Borrowings and Note 4 – Vessels, net, respectively; and (ii) Note 11 – Borrowings and Note 7 – Vessels, net, respectively, to the Company’s consolidated financial statements included in the Annual Report filed on Form 20-F on March 24, 2023 with the SEC for the year ended December 31, 2022.
For the three and six month periods ended June 30, 2023 the sublease income (net of commissions, if any) for vessels where the Company is a lessee amounted to $
As of June 30, 2023, the weighted average useful life of the remaining finance lease terms was
The table below provides the total amount of lease payments and options to acquire vessels on an undiscounted basis under the Company’s finance leases as of June 30, 2023:
Period ending June 30, | Amount | |
2024 | $ | |
2025 | ||
2026 | ||
2027 | ||
2028 | ||
2029 and thereafter | ||
Total | $ | |
Finance lease liabilities, including current portion (see Note 6 – Borrowings) | $ | |
Discount based on incremental borrowing rate | $ |
Bareboat charter-out contract
Subsequently to the charter-in agreement, the Company entered into bareboat charter-out agreements for a firm charter period of
The Company recognizes in relation to the operating leases for the charter-out agreements the charter-out hire income in the Consolidated Statements of Operations on a straight-line basis. For the three and six month periods ended June 30, 2023 the charter hire income (net of commissions, if any) amounted to $
Table of Contents | F- 26 |
NAVIOS MARITIME PARTNERS L.P. UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit data) |
NOTE 15 – SUBSEQUENT EVENTS
In August 2023, Navios Partners agreed to acquire two newbuilding Japanese
In August 2023, Navios Partners agreed to acquire from an unrelated third party, the Navios Horizon I, a -built vessel of dwt (previously chartered-in) for an acquisition price of $million. The delivery of the vessel is expected within the .
Table of Contents | F- 27 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
NAVIOS MARITIME PARTNERS L.P. | ||
By: | /s/ Angeliki Frangou |
|
Angeliki Frangou | ||
Chief Executive Officer | ||
Date: August 31, 2023 |