Operator: Thank you for joining us for Navios Maritime Partners' Second Quarter 2020 Earnings Conference Call. With us today from the company are Chairman and CEO, Ms. Angeliki Frangou; Chief Financial Officer, Mr. Stratos Desypris; and Executive Vice President of Business Development, Mr. George Achniotis.

As a reminder this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners website at www.navios-mlp.com. You'll see the webcast link in the middle of the page and a copy of the presentation referenced in today's earnings conference call will also be found there. Now I will review the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners.

Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

The agenda for today's call is

as follows: first, Ms. Frangou will offer opening remarks; next, Mr. Desypris will give an overview of Navios Partners' financial results; then Mr. Achniotis will provide an operational update and an industry overview; and lastly, we will open the call to take questions. Now I turn the call over to Navios Partners' Chairman and CEO, Ms.

Angeliki Frangou. Angeliki?

Angeliki Frangou: Thank you, Doris, and good morning to all of you joining us on today’s call. While the pandemic has greatly affected businesses, countries, and people all over the world, the Navios family continues to persevere. We take great pride in the safety of our employees and we have adapted to this ever changing environment. Despite the pandemic, I am pleased with the results of the second quarter of 2020.

Navios Partners reported $46.5 million in revenue and $14.3 million in adjusted EBITDA. Navios Partners also declared a quarterly distribution of $0.05 per unit, representing an annual distribution of $0.20 per unit. This distribution represents a reduction from the previous quarterly distribution, which used to reduce our distribution in light of the combination of challenges and opportunities from the ongoing pandemic. The pandemic negative effect on global economic activity can be seen in the duration of the downturn in charter rates. Year-to-date 2020, the Capesize 5TC rate is averaging around $9,700 per day.

Even with the rate regarding the first month, as countries emerge from quarantine and return to normalized ways of doing business. The charter rate is still 50% less than the 2019 average rate in $1,000. As you can see from Slide 5, NMM’s fleet is currently 53 vessels. During December 2019, we liquidated Navios Europe I and during the second quarter of 2020, we liquidated Navios Europe II. NMM was 33.5% interest in Navios Maritime Containers.

On Slide 6, you can see why Navios Partner is a premier drybulk shipping platform. We have a strong balance sheet with low leverage. Our net debt-to-capitalization is 78.7%, we have staggered debt maturities and no significant committed growth CapEx requirement. We have cash flow capability with about $500 million in remaining contracted revenue. For the second half of 2020, approximately 39% open and index-linked days have a manageable breakeven of $8,801 per open day.

Slide 7 details the pandemic impact on global trade. The IMF projects, 4.9% decrease in 2020 global GDP, mostly driven by the 8% decline in advanced economies. As a result of the disruption to world economic activity, drybulk trade is expected to contract by 4.5% in 2020. We may have felt much of this negative impact in the first half of 2020 as countries observed extended lockdowns. Looking forward, economies are projected to recover in the second half of 2020 and drybulk trade is projected to increase by 4.6% in 2021.

Moreover, global GDP is expected to increase by 5.4% in 2021, which we would expect to be positive for a drybulk trade. Slide 8 shows how NMM has weathered the storm during the ongoing market disruption. For the second quarter of 2020, we generated $14.3 million in adjusted EBITDA and a Time Charter Equivalent rate of $11,202 per day. As for our chartering activities, the vessels were fixed long-term provide us with protection against the ongoing market downturn. We have 61.2% of our days fixed for the second half of 2020, at an average charter rate of $13,667 net per day and the remaining open days provide us with a breakeven of $8,801 per open day.

As to refinancing activities, we entered into approximately $50 million of new commercial bank facilities, which included a $17 million facility to refinance for container ships and $29.5 million new loan to finance five drybulk vessels acquired from Navios Europe II. We also completed the liquidation of Navios Europe II during the second quarter. Our net receivable of $17.3 million were settled through at $2.7 million in cash and the balance with a fair value of five drybulk vessels, including assumption of loans and working capital. Slide 9 details our cost structure for the remaining six months of 2020. 61.2% over available days are fixed at an average rate of $13,667 net per day and 3,641 open plus index-linked days provide us with a breakeven of $8,801 per open day, but also allow us to generate $16.6 million assuming current rate.

Slide 10 shows our liquidity. As of June 30, 2020, we had total cash of $29.8 million and total borrowings of $488.2 million. Our net debt to capitalization is 38.7%. We have staggered debt maturities and no committed growth CapEx. At this point, I would like to turn the call to Stratos Desypris, Navios Partners CFO, who will take you through the results of the second quarter of 2020.

Stratos Desypris: Thank you, Angeliki, and good morning all. I will briefly review our annual financial results for the second quarter ended June 30, 2020. The financial information is included in the press release and is summarized in the slide presentation available on the company’s website. Before I start discussing our financial highlights, I would like to draw your attention to certain one-off items that are listed in Slide 11. For simplicity, the discussion of the financial results below exclude the effect of the one-off items listed in this slide.

Moving to Slide 11. Revenue for the second quarter of 2020 decreased by 2.5% to $46.5 million compared to $47.7 million for Q2 of 2019. The decrease was mainly due to the 20.7% decrease in the Time Charter Equivalent rate achieved in the second quarter of 2020. This decrease was mitigated by the 25.8% increase in our available days. Adjusted EBITDA for the second quarter of 2020 decreased to $14.3 million compared to $22.3 million in the second quarter of 2019, primarily due to a $5.4 million increase in operating expenses due to our larger fleet and $0.9 million decrease in equity in earnings from Navios Containers.

Adjusted net loss for the quarter amounted to $7.8 million. During the second quarter of 2020, we reported a negative operating surplus of $1.1 million. The replacement and maintenance CapEx Reserve was $8.6 million. Fleet utilization for the second quarter was almost 99%. Moving to the six month operations.

Time Charter revenue for the six months decreased by $1.6 million to $93 million, compared to $94.6 million in the first half of 2019. The decrease was mainly due to a 19.8% decrease in the Time Charter Equivalent rate per day in the second half of 2020. This decrease was mitigated by the 25.4% increase in our available days. Adjusted EBITDA for the first half of 2020 amounted to $33.4 million compared to $45 million in the same period of last year, primarily due to $11 million increase in operating expenses due to our larger fleet, which was partially mitigated by $0.8 million increase in equity and earnings of Navios Containers. Adjusted net loss for the first half of 2020 amounted to $11.7 million.

Operating surplus for the six months ended June 30, 2020 was $3.3 million. Turning to Slide 12. I will briefly discuss our key balance sheet data as of June 30, 2020. Cash and equivalents was almost $30 million. Long-term borrowings, including the current portion, net of deferred fees amounted $488.2 million.

Our cost of debt has been significantly reduced, as a result of prepayments of the Term Loan B Facility as well as a decrease in LIBOR rates. This resulted in reduction in the net interest expense for the first half of 2020, approximately $9 million compared to the same period of 2019. Net debt to book capitalization was 38.7% at the end of the quarter. Moving to Slide 13, we declared the cash distribution for the second quarter of 2020 of $0.05 per unit equivalent to $0.20 per unit on annual basis. Our current annual distribution provides for an effective yield of approximately 2.5% based on yesterday's closing price.

The record date is August 10 and the payment date is August 13, 2020. Total cost distributions for the quarter amount to $2.6 million. Slide 14 shows the detail of our fleet. We have a large, modern divest fleet with a total capacity of 5.3 million deadweight tons and an average age of 11 years. Our fleet consists of 53 vessels, 14 Capesizes, 23 Panamaxes, 6 Ultra-Handymax and 10 containerships.

In Slide 15, you can see the list of our fleet with the contracted rates and the respective expiration dates per vessel. Our charters have an average remaining contract duration of approximately 2 years. Currently, we have contracted 95% of our available days for 2020 and 41.5% for 2021 including days contracted at index-linked charters. The expiration dates extend to 2028. In Slide 16, you can see the details of Navios Containers.

Currently, it controls 29 containerships. Navios Partners has a 33.5% ownership interest in Navios Containers. I now pass the call to George Achniotis, Executive Vice President of Business Development, to discuss the industry section.

George Achniotis: Thank you, Stratos. Please turn to Slide 18.

In the last few months, we have seen extraordinary volatility in the rates, as first half cargo demand slammed on the back of the impact of the exception caused by the pandemic. However, the Chinese economy, which accounts for approximately 40% of global travel trade returned to positive growth in Q2 on the back of government stimulation, particularly aimed at infrastructure spending. The BDI reflected this unusual seasonality by reaching a year-to-date low of fleet 93 in mid-May. Before turning around to reach a nine-month high or 1,956 in early July on the back of a strong recovery in demand led by Brazil and iron ore exports that head Capesize rates reached close to $4,000 before correcting over the last few weeks. With the entire globe, continuing to be affected by the pandemic, the IMF projected global GDP contraction of 4.9% for 2020 led by an 8% contraction in advanced economies.

Governments have put in place unprecedented emergency monetary and fiscal plans to support the economies. In light of these, the IMF projects 5.4% globally GDP growth in 2021. As a result of the above, seaborne drybulk trade is projected to contract by 4.5% in 2020 and grow by 4.6% in 2021. Turning to Slide 19. The graph on the left shows that for the second time of the year, demand for the three major cargoes, iron ore, coal and grain is forecasted to outpace the first half by 8%.

This increase is led by iron ore, which is expected to grow by about 12% or 85 million tons, much of which will come from Brazil, adding to ton miles. If you look at the graph on the right, net fleet growth is forecast to be 3% this year. Second half delivers are expected to be 44% lower than the first half, resulting a less than 1% expected 2020 second half. Turning to Slide 20. Chinese iron ore imports were flat last year, but are expected to increase by 4.4% in 2020.

Chinese steel mills have reduced their iron ore stockpiles by about 49 million tons between June 2018 and July 2020. With additional availability of iron ore in the second half of 2020, shipments from Brazil and Australia to China are expected to increase by about 40 million tons per quarter as steel mills replenish stockpiles, driving demand for Capesize vessels. The Chinese fiscal stimulus and infrastructure spending should support steel production and in turn, drybulk trade going forward. Moving to Slide 21. The combination of the pandemic and the significant drop in the price of oil has resulted in reduced coal trade.

Asian coal imports, which account for over 80% of the world’s seaborne trade, are expected to decrease in 2020 by 6.4%, but increase by 5.2% in 2021. This reduction has added pressure on the smaller-sized vessels, which has been partially offset by increased demand for grains discussed on the following slide. Turning to Slide 22. Worldwide grain trade has been growing by approximately 5% CAGR since 2008, mainly driven by Asian demand. Recently, China has been a major buyer of soybeans and corn is it seeks to rebuild its swine herd.

An ever-increasing world population as well as increasing coaling demand worldwide continues to support the global grain trade. With the pandemic disruptions causing minimal grain trade disruptions, the International Grains Council projects record shipments of wheat, corn and soybean for the 2020 crop year. Please turn to Slide 23. The current order book stands at only 7.4% of the fleet, which is the second lowest since the 7.2% recorded in April 2002. New building contracting has collapsed and year-to-date is down by about 66% compared to 2019.

With the order book being frontloaded this year and scrapping expected to accelerate in the second half due to their phase out of Vale VLOCs, net fleet growth is expected to remain low at about 3% in 2020. Turning to Slide 24. Vessels over 20 years of age are about 7% of the total fleet, which compares favorably with the previously mentioned low order book. Scrapping was started slowly due to a combination of the pandemic lookdown and logistic and co-pay challenges now stands at 9.6 million tons year-to-date. This amount already exceeds the total for the whole of 2019 any of these in excess of 1% of the fleet.

In conclusion, positive demand fundamentals mainly due to the easing of lockdowns around the world and there is start of economic activity along with the reduced fees availability caused by the Vale phase out of its VLOC fleet, should provide support to the drybulk market, in its continued effort to navigate through the pandemic storm. And this concludes my presentation. I would now like to turn the call over to Angeliki for her final comments.

Angeliki Frangou: Thank you, George. This completes our formal presentation, and we’ll open the call to questions.

Q -

Randy Giveans: Hi, how are you?

Angeliki Frangou: Good morning. how are you doing?

Randy Giveans: Good, good. All right. So yes, first question. Obviously, on the distribution cut, why was that cut from $0.30 to $0.35 that cut it to come up with that number.

And then now that the drybulk market has materially improved and their presentation appears pretty bullish for the back half of the year. Any chance the distribution gets increased next quarter or soon thereafter when we expect you to earn kind of positive income?

Angeliki Frangou: Very good question. Let’s start from amounting. I mean we are still the pandemic; I mean, there’s a lot of volatility and even with a healthy Capesize rate of high teens you are still at 50% of what was the year-to-date late of last year. So basically, we are in a volatile environment.

And with these, we’re actually having – we’ll provide more balance sheet flexibility. I mean, this actual drop was much deeper than we thought. I mean in last quarter, I mean, it was – hindsight is always 2020. but this has been a volatile environment and I think providing additional balance flexibility, I think it’s a prudent decision.

Randy Giveans: Okay.

And was there any specific benchmarks you looked at to cut it down to $0.05 instead of maybe $0.10 or zero?

Angeliki Frangou: I think what – I mean now, it’s around the current level; we’re having about the 3% in the share price. And what – and we are not high if market regardless and we have a sustainable visibility of cash flows and we see that this very unique, because the pandemic is not the cycle. It’s not the – it’s different than a business cycle. So basically, we really need to see a sustainable recovery on that.

Randy Giveans: Okay.

And then looking at Navios Europe II, it looks like you received $2.7 million in cash. I guess what was the total equity value in the vessels you received net of debt? And then also on that, it looks like you raised a $29.5 million loan for those vessels, but it matures in less than a year. So, I guess what are the plans for those vessels and I guess that loan next year?

Angeliki Frangou: We got a short facility, I mean naturally longer facility [ph], but because those were doing – we were working on different segments of some of our packages. So, this is done on a shorter-term. but overall, I mean, if you see the maturities of the company, we have a very staggered debt maturities and whatever we’ll have next year is basically covered by scrap.

So, the reason we didn’t mind is because we’re looking on overall restructuring, some of our other facilities, not reception, like creating a new bucket. So one thing, I’d like to say here, I mean, if you see NMM, where we are today, we have a company with a very low breakeven, low leverage, and staggered debt maturity. So, we are able really to – we are actually – we can not only we can grow in any market environment as we see. And one thing that I’ll say that – yes, the lockdowns created a really uncertain time for drybulk. but overall, we see a positive effect for the second half.

The things that we going need to see is that we surpass the pandemic and we see it further longer-term stronger market.

Randy Giveans: Yes. And then could you give some context around the equity value of those five vessels, net of the debt?

Stratos Desypris: If you see the presentation, we had a net receivable of around $17.5 million. So, we got around $2.7 million in cash flow, so the rest was net value of the vessels, because the vessels we have those associated loans and working capital. But as Angeliki just said, the facility that came with the vessels.

Recently, we refinanced it with this new facility, the $29.5 million that type of vessel is maturing next year. And this facility effectively is almost covered, there was a balloon of these facilities, almost covered by the scrubber of the vessel, so it’s a very comfortable position for us.

Randy Giveans: Got it, fine. And then just quick strategy question, and then a modeling question. Before looking at the unit price now, obviously today had a pretty steep discount to NAV.

You also have a lot of vessels over, call it 15 years of age. So I just wanted your thoughts on those two selling vessels and repurchasing units, either simultaneously or both separately.

Angeliki Frangou: Actually, that's a very, very, very good question. And I think part of the strategy in the balance sheet flexibility is will position the company. I mean, part of our ongoing processes, some of the – all the vessels you will sell and you will substitute with younger vessels in our opportune times.

And this is – this can be – our goal is to keep our fleet young, and this is an ongoing process that we will have. And we did that a lot, a couple of years ago, and this is an ongoing process that we will be looking on repositioning the fleet. And it's part of our overall goals and strong driver on decisions.

Randy Giveans: Sure. And then repurchase in units?

Angeliki Frangou: This is part of – I mean, this is part of – we had then – we returned capital to our investors through different methods.

I think now, right now, we are in a process that if you are doing a replacement of assets, you will need to be positioning for portfolio first.

Randy Giveans: So then I guess lastly, just a quick modeling question, the miss in terms of our EPU estimate, was there an invite out, pretty good jump in G&A, it was partially offset by a drop in interest expense. So I guess, what caused that G&A increase? And what run rate should we use for these two expenses going forward? G&A and interest expense?

Stratos Desypris: I mean G&A, our model is directly linked of course with a number of the vessels that we have. So you have an increase of the vessel fleet by almost 25%, of course, G&A did not increase by 25%, it increased by much lower than that. And there was also offset by some decreases in the rest of our G&A item.

So overall, if you see on the three month period, $0.5 million increased on G&As. I think this is a good run rate going forward, given of course the increased fleet that we have today.

Randy Giveans: So the almost $7 million, because it was $4 million first quarter, right? And then…

Stratos Desypris: [indiscernible] the G&As if you see historically between the quarters. Yes, so I would say that for Q2 and Q4, this $7 million is a good number, of course you have to take into account as – Q2, Q1 and Q3, you have to expect it to be lower again in the lower levels.

Randy Giveans: Yes.

All right. Just made sure that. And then on the interest expense?

Stratos Desypris: Interest expense, I think this is a good run rate. I mean, this is a combination of our efforts last year to refinance the Term Loan B. So we did use significantly the interest cost of the company, but also it's a matter of the decrease in the LIBOR rates itself.

So you have seen in the nine months, we have approximately $9 million decrease in the interest expense. And I think this is something that you should keep considering for the future. I mean, just adding of course, the new facilities that we have added, but as a run rate, I would say it should be pretty representative.

Randy Giveans: Perfect. All right.

Well, that's it for me. Thanks, again.

Stratos Desypris: Thank you.

Angeliki Frangou: Thank you.

Operator: I'm showing no further questions at this time.

I'd like to turn the call back to Mrs. Angeliki Frangou for any additional or closing remarks.

Angeliki Frangou: Thank you. This completes our quarterly presentation.

Operator: Thank you, ladies and gentlemen.

This does conclude today's conference call. You may now disconnect.