Navios Maritime Holdings' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Navios Maritime Holdings Inc. ( NM)

Q3 2011 Earnings Conference Call

November 17, 2011 08:30 ET

Executives

Angeliki Frangou – Chairman and Chief Executive Officer

Ted Petrone – President

Ioannis Karyotis – Senior Vice President, Strategic Planning

George Achniotis – Chief Financial Officer

Analysts

Natasha Boyden – Cantor Fitzgerald

Seth Lowry – Citi

Presentation

Operator

Thank you for joining us for this morning’s Navios Maritime Holdings Third Quarter and Nine Months 2011 Earnings Conference Call. With us today from the company are Chairman and CEO, Ms. Angeliki Frangou; President, Mr. Ted Petrone; SVP of Strategic Planning, Mr. Ioannis Karyotis; and Chief Financial Officer, Mr. George Achniotis. As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Holdings’ website, www.navios.com.

Before I review the structure of this morning’s call, I’d like to read the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Holdings management and are subject to risks and uncertainties, which could cause actual results to differ from forward-looking statements.

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

The agenda for today’s call is as follows. First, Ms. Frangou will offer opening remarks. Next, Mr. Petrone will provide an operational update and an industry overview. Following Mr. Petrone’s remarks, Mr. Karyotis will go through an overview, including recent financials for Navios South American Logistics. Then Mr. Achniotis will review Navios Holdings’ financial results. Lastly, we will open the call to take your questions.

I would now like to turn the call over to Navios Holdings’ Chairman and CEO, Ms. Angeliki Frangou. Angeliki?

Angeliki Frangou – Chairman and Chief Executive Officer

Thank you, (Laura). Good morning to all of you joining us on today’s call. We are pleased to report our results for the third quarter of 2011. We had a solid quarter. Revenue and EBITDA were up 7% and 6% respectively. This was not an easy task given the difficult market we have been experiencing in the past couple of years and it reflects a hard work of the Navios team in managing our relationships, counterparties, and physical fleet during a great turbulent period. We have once again declared a $0.06 dividend for the quarter representing a yield of about 6%.

Slide 2 shows our guidance structure. The value of Navios Holdings primarily derives from four areas; the drybulk fleet within Navios Holdings and three principal operating subsidiaries. The growth continues to be valid at less than the sum of its parts. As you can see from a quick mark, the value of Navios Holdings interest in the two publicly released subsidiaries is $2.99 per share. The market does think that the other two businesses are only worth $0.72.

Navios Holdings core fleet, a drybulk fleet consists of 43 vessels in the water. This fleet has long-term charters with creditworthy counterparties that are all insured by AA+ European governmental entity. Our insurance coverage is unique. This insurance should provide comfort to all our stakeholders that we can continue to manage during difficult periods. The value of Navios Logistics is also growing. We have a superb management team, which is addressing the market opportunity and together we have transformed Navios Logistics into a key provider of service in the Hidrovia region of South America. Ioannis Karyotis will address Navios Logistics results in further detail later.

Slide 3 shows our competitive positioning. It reflects our strategy and the hard work we have dedicated to maintain cost in a very difficult market. Looking forward, we have already covered almost 70% of our fleet for 2012. We are also working on our book for 2013. We have covered almost 42% of our fleet days for this period. This forward visibility provides us with a margin of safety.

I wanted to share with you our assessment of our positioning. 2011 is literally over. All of our days have contracted and you can see that revenues will exceed expenses. We also feel very good for 2012. As we stand at this moment, we have 4,778 open vessel base. But let’s focus on the revenue based on the number of vessels contacted at this moment. As you can see from the chart, our contacted revenue is about $13 million less than our all-in cost. Now, if you divide this $13 million deficit by 4,778 open vessel base, you can see that we only need $2,740 per day per vessel for a breakeven. We think this is insignificant.

Just to provide a little bit of context for our low breakeven rate, we have provided the 2011 year-to-date BDI time charter averages for all type of vessels. This rate, in a difficult year, range from $13,800 per day to $14,500 per day for the different types, well above our breakeven rate. Further comfort is gained from reviewing the list of vessels that we have opened. We have only one Capesize vessel open, two Panamaxes and the balance are Handymax vessels. Handymax have proved to be particularly resilient in the current environment. They actually had the best yearly average for 2011, even though it is a smallest vessel class.

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