Operator: Thank you for joining us on Navios Maritime Partners Third 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 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'll open the call to take questions.

Now I'll turn the call over to Navios Partners' Chairman and CEO, Mrs. Angeliki Frangou. Angeliki?

Angeliki Frangou: Thank you, Doris, and good morning to all of you joining us on today's call. Given the difficulties associated with the pandemic, I am pleased with the results for the third quarter of 2020. During the third quarter, Navios Partners reported revenue of $64.5 million and adjusted EBITDA of $30.9 million.

Although, drybulk demand in the first half of 2020 was hurt by the global shutdowns, fiscal stimulus and other policy measures helped global economies rebound in Q3 and continue to rebound in Q4. We believe that this improvement is attributable to the exit from quarantines, food security consideration, and new purchasing patterns in the pandemic economy. Consequently, we are optimistic about the expected growth in demand throughout Q4 in 2021. As you can see from Slide 5, NMM’s fleet is currently 55 vessels. NMM holds a 35.7% interest in Navios Maritime containers.

On Slide 6, you can see why Navios Partners is a premium drybulk shipping platform. We maintain a strong balance sheet with low leverage. Our net debt-to-book capitalization is 39.2%. We have staggered debt maturities and no committed growth CapEx requirements. We also have about $465 million in remaining contracted revenue and low break-even of $5,365 per open day for Q4 2020.

Slide 7 details the pandemic impact on global trade. Obviously, GDP for the first half of 2020 was weak given the global shutdown. However, the economic outlook for 2021 is favorable. The IMF expects global GDP to grow by 5.2%, led mainly by China, and an expected GDP growth of 8.2% next year. As a result of the disruption to economic activity, during the first half of 2020, drybulk trade is expected to contract by 2.7% in 2020.

However, as economies continue to recover drybulk trade is projected to increase by 3.9% in 2021. Slide 8 shows our recent development during the third quarter of 2020. For Q3, we generated $30.9 million in adjusted EBITDA and an $8.8 million in adjusted net income. As to our fleet update, we continue to renew our fleet and improve its age profile. We acquired two drybulk vessels with an average age of six years for $51 million.

We also agreed to sell two of our older vessels with an average age of 12 year for about $13 million. The acquisition of the two drybulk vessels was partially financed with $33 million loan from a commercial bank. The terms of the loan included maturity in Q3 of 2025, amortization profile of 9.7 years, and then interest rate of 3.25% above LIBOR. Our operating break-even for the fourth quarter of 2020 remains low, about 70% of our available days are fixed at about $14,000 net per day and the remaining 30% of our open and index-linked days provide us with a low break-even of $5,365 per open and index day, excluding distributions and CapEx. Slide 9, further details our Q4 operating break-even, 69.6% of our available days are fixed at an average rate of $14,170 net per day.

Our 1,481 open plus index-linked days provided with flexibility and cash flow potential with a low break-even estimated at $5,365 per day. Assuming one-year time charter rate, we should be able to generate about $11.7 million in free cash flow for the fourth quarter of 2020. Slide 10 shows our liquidity. As of September 30, 2020, we had a total cash of $30.6 million and total borrowings of $505.7 million. Our net debt-to-book capitalization is 39.2% and we have staggered debt maturities and no committed growth CapEx.

At this point, I would like to turn the call over to Mr. Stratos Desypris, Navios Partners’ CFO, who will take you through the results of the third quarter of 2020. Stratos?

Stratos Desypris: Thank you, Angeliki, and good morning, all. I will briefly review our unaudited financial results for the third quarter and nine months ended September 30, 2020. The financial information is included in the press release and 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 one-off items listed in the slides. Moving to the financial results, as shown on Slide 11, our revenue for the third quarter of 2020 increased by $1 million to $64.5 million compared to $63.5 million for Q3 2019. The increase was mainly due to the 39% increase in available days in 2020. The increase was mitigated by 27% decrease in the time charter equivalent rate achieved in the third quarter of 2020.

Our adjusted EBITDA for the third quarter of 2020 was $30.9 million compared to $41.3 million in the third quarter of 2019. However, compared to the second quarter of 2020, our adjusted EBITDA increased by 116%, reflecting the significantly improved rate environment. Adjusted net income for the quarter amounted to $8.8 million. Opening surplus for the third quarter of 2020 amounted to $16 million and the replacement and maintenance CapEx reserve was $9.5 million. Fleet utilization for the third quarter of 2020 was over 99%.

Moving to the nine month operations, time charter revenue for the nine months of 2020 decreased by $0.6 million to $157.5 million compared to $158.1 million in 2019. The decrease was mainly due to the 22% decrease in the time charter equivalent achieved in the nine months of 2020. This decrease was partially mitigated by the 30% increase in our available days. Adjusted EBITDA for the nine months of 2020, amounted to $64.3 million, compared to $86.3 million in the same period of last year, mainly due to the $0.6 million decrease in revenues discussed above and $18.6 million increase in vessel operating expenses due to our increased fleet, the $1 million decrease in equity in net earnings of affiliated companies, and $1 million increase in other expenses. Adjusted net loss for the nine months of 2020 amounted to $2.9 million.

Operating surplus for the nine months ended September 30, 2020 was $19.3 million. Turning to Slide 12, I will briefly discuss some key balance sheet data as of September 30, 2020. Cash and equivalent was $30.6 million. Long-term borrowings, including the current portion, net of deferred fees, amounted to $505.7 million. Our cost of debt has been significantly reduced as a result of refinancing the term loan B last year as well as the decrease in LIBOR rates.

This resulted in the reduction of interest expense in finance cost for the first nine months of 2020 by approximately $16.6 million compared to [indiscernible] 2019. Net debt-to-book capitalization was 39.2% at the end of the quarter. Moving to Slide 13, we declare the cash distribution for third quarter 2020 or $0.05 per unit, equivalent to $0.20 per unit on an annual basis. Our current LIBOR integration provides [Technical Difficulty]. In Slide 15, you can see the list of our fleet, with the contracted rates and the respective expiration dates per vessel.

Currently we have contracted 98.7% of our available days for 2020 and 45.5% for 2021, including days contracted at index-linked charters. The expiration days extend to 2028. In Slide 16, you can see the details of Navios Containers. Currently, it controls 29 containerships. Navios Partners has a 35.7% 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?

George Achniotis: Thank you, Stratos. Please turn to Slide 18. Q3 saw a jump in BDI with a quarterly average settling close to double Q2 at 1,522. The quarter started with a nine months high of the PPI in July before softening in August.

However seasonality return as the PPI reached year-to-date high on October 6, at 2097, led by Atlantic iron ore and grain exports primarily to China before correcting over the last few weeks. However, the Chinese economy, which accounts for approximately 40% of global dry bulk trade, continued positive growth on the back of government stimulus, particularly aimed at infrastructure spending. China according to the IMF will be the only major requirement to grow this year at 1.9% with further growth of 8.2% expected in 2021. With the entire globe continuing to be affected by the pandemic, the IMF projected global GDP contraction of 4.4% for 2020 led by 5.8% contractually in advanced economies. Governments got put in place unprecedented emergency monetary and fiscal plans to support the economies.

In light of these the IMF projects 5.2% of global GDP growth in 2021. The 2020 updated forecast for dry bulk trade is a contraction of 2.7% and growth of 3.9% in 2021. Turning to Slide 19. The graph on the left shows that for 2021 dry bulk demand for the three major cargoes of iron ore, coal and grain is focused to outpace 2020. This increase is led by coal, which is expected to grow by [Technical Difficulty].

If you look at the graph on the right, net fleet growth is forecast to be 3.4% this year and only 1.3% for 2021. Net fleet growth is expected to remain low over the next few years as the order book is the lowest on record. Turning to Slide 20. Despise the pandemic, Chinese iron ore imports are expected to increase by 7.4% in 2020. Chinese steel mills have reduced their iron ore supplies by about 34 million tons between June 2018 and October 2020.

China set a monthly record for iron ore imports in July at about 110 million tons with the second one highest imports coming in September at 106 million tons, the steel production continues to set new records. With additional availability of iron ore in Q4, shipments from Brazil and Australia to China are expected to match Q3 levels as steel mills replenished of price driving demand for Capesize vessels. The Chinese fiscal stimulus and infrastructure spending should support steel production, and in turn drive up trade going forward. Moving to Slide 21. The combination of the pandemic and the significant drop in the price of oil and gas has resulted in reduced coal trade.

Asian coal imports, which account for over 80% of the world seaborne trade are expected to decrease in 2020 by 6.5%, but increase by 4.4% 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. Overall, Asian grain imports are focused to increase by 9.4% in 2020, and a further 3.3% in 2021.

An ever increasing world population, food security issues driven by the pandemic, as well as increasing product demand worldwide continues to support the global grain trade. With the pandemic disruptions causing minimal grain trade disruptions, the International Grain 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 6.3% of the fleet, which is the lowest in our report. Newbuilding contracting has collapsed, and year-to-date is down by about 65% compared to 2019.

With the order book being front-loaded this year, and scrapping expected to accelerate to phaseout the Vale VLOCs, net fleet growth is expected to remain low at about 3.4% in 2020, and only 1.3% in 2021. Turning to Slide 24. Vessels over 20 years of age are about 6.5% of the total fleet, which compares favorably with the previously mentioned low order book. Scrapping, which started slowly due to a combination of the pandemic lockdown and logistical and crew change challenges, now stands at 13.4 million tons year-to-date. This amount is almost 70% higher than the full year 2019, and it's about 1.5% of the fleet.

In conclusion, positive demand fundamentals, mainly due to the restart of economic activity around the world, along with reduced credit availability should provide support to the dry bulk market in its continuing effort to navigate through the pandemic storm. And this concludes my presentation. I would now like to turn the call over to Angeliki for the final comments. Angeliki?

Angeliki Frangou: Thank you, George. This completes our formal presentation.

We open the call for questions.

Operator: [Operator Instructions] Your first question comes from the line of Chris Wetherbee with Citi.

Chris Wetherbee: Yes. Hey, thanks for taking the question guys. I hope you're well.

I guess I wanted to start George where you left off on the order book. And maybe to get a better understanding of how we see this kind of playing out, so we're at the lowest level that we've seen, I guess, on a record for the order book just over 6% of the fleet. It seemed that with uncertainty in the world orders have been extraordinarily difficult to come by. If you go into 2021, how do you see this kind of plan out? What would you expect in terms of fleet growth for the dry bulk fleet in 2021, number one? And then I guess maybe what the replenishment of the order book, if there is any you look like number two.

Angeliki Frangou: Chris, I think – this is Angeliki.

I think one of the things that makes us very optimistic on dry bulk is that basically, we have the lowest order book of 6.3%, with vessels that are over 20 about 6.5%. So basically, you have a very -- overall, almost one of the lowest order books. But the most -- the reason that we're optimistic is because there are still periods where order books are low, but then they start having an increase all the around the world. I mean, the different date is because of the technological uncertainty, and this is not something like a scrapper where you have this kind of a solution to all the other places. I think the technological issues, what will be the end and what technology? This uncertainty, we need to -- order book across shopping, and we know for some time.

That gives you a runway where we see that demand is there because of food security, because of our additional stockpiles for infrastructure. So you have a condition that we haven't seen for a long time. And the technological uncertainty is something that will remain for some time because basically shipping is in the need for solution into the long-haul and then they're in a much more different -- we don't have yet the solution on the engine or the correct -- something that will give the propulsion for these kinds of movement. So I think that this is a very positive issue, and that's why we'll not see any [indiscernible]

Chris Wetherbee: Okay. And if you had – I mean if you had debenture, I guess, I think we’re dealing 3% plus in terms of fleet expansion in 2020.

You’d expect that number to be lower is my guess in 2021?

Stratos Desypris: 2021, we expect it to reach it further 1%.

Chris Wetherbee: Okay. That’s helpful. Appreciate that. And then I guess, I wanted to circle back to debt maturities in 2021, I think a little over $130 million.

Can you talk a little bit about sort of what the plan is for that and go into a bit more detail on sort of how that is going to be addressed?

Angeliki Frangou: I'll let Stratos, but this picture is, as we said a little bit below at around 50%, and all of them are very low levels that the larger one is basically recovered the entire refinancing initiatives, scrap values, which definitely our most job, and much more very valuable cash flows and everything, but its' -- they are very easily financing these transactions.

Stratos Desypris: Just to add to what Angeliki has been saying. I mean, the three facilities, as we said, two of them are below 50% of our obligation and fund was very reasonably [indiscernible]. And the third one, you have two elements that you need to take into account. The first one, but the scrap value almost entirely covered the refinancing amount.

But on the second item that you have take into account is that this facility includes the five HMM vessels. And just the TEU, these five vessels alone is coming almost 2x the whole gate service of these facilities. So, yes, we feel very confident in the refinancing of this.

Chris Wetherbee: Okay. Okay.

That's helpful. Thanks very much for the time. I appreciate it.

Operator: Your next question comes from the line of Randy Giveans with Jefferies.

Chris Robertson: Hi, this is Chris Robertson on for Randy.

Thanks for taking our call. How are you, Angeliki?

Angeliki Frangou: Good morning, how are you doing?

Chris Robertson: Good, good. So I guess, just on the – our first question on the distribution cut. So I guess now that the drybulk and container ship markets have improved. How are you thinking about increasing the distribution going forward? And how will you balance that with unit repurchases as you're trading at a pretty big discount to NAV at the moment?

Angeliki Frangou: This was a conservative posture.

I mean, you have to realize we're in the pandemic economy. And as that, I mean, you see positive effects, as I said on – we have a steady supply and strong demand because of food security, because of need of inventories to be ahead, but we have to be – we have to have a conservative posture. And as in net – as we see, I mean, today, what we're doing is basically we have – with a low breakeven, no levers. We are ready to get the cash flows that we see that are generated. On dividends is something that we're going to more normalized, at least we see visibility far more clear.

Then we see that we give a temporary investments. We have other ways to increase with buybacks, with other rates. But I think on the current conditions with an uncertainty that is developing, we need to have more conservative posture.

Chris Robertson: Okay. That's fair.

I guess, following up on that then, so around the decision to purchase the two vessels, in light of the discount to NAV in the unit price at the moment, kind of what drove the decision to buy vessels now, instead of maybe repurchasing some units?

Angeliki Frangou: We're a different company after all, and we have a portfolio of assets that are unique, and the plan is absolute and we make sure that we have the right assets to have – to generate the cash flow. So what we did is basically, it is about, we bought two vessels that are over six years old and Capesize and Panamax Japanese fleet, high quality, as well as some vessels that over 12 years old. So that is a replacement of asset. That makes sense. And it is an ongoing part of our business, buying larger vessels, younger vessels, to keep our end capacity, to grow our end capacity and this is – and this reflects our portfolio.

That is part of an ongoing process.

Chris Robertson: All right. Yes. Thanks for the clarity. That's it for us.

Thank you.

Operator: Thank you. I'd now like to turn the call back over to Angeliki.

Angeliki Frangou: Thank you. This concludes our Q3 results.

Operator: Thank you. This concludes today's conference call. You may now disconnect.