Q4 2013 Navios Maritime Holdings Earnings Conference Call

Feb 19, 2014 AM EST
NM - Navios Maritime Holdings Inc
Q4 2013 Navios Maritime Holdings Earnings Conference Call
Feb 19, 2014 / 01:30PM GMT 

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Corporate Participants
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   *  Laura Kowalcyk
      Navios Maritime Holdings Inc. - VP, Corporate Communications
   *  Angeliki Frangou
      Navios Maritime Holdings Inc. - Chairman, CEO
   *  Ted Petrone
      Navios Corporation - President
   *  George Achniotis
      Navios Maritime Holdings Inc. - CFO
   *  Ioannis Karyotis
      Navios South American Logistics Inc. - SVP, Strategic Planning

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Conference Call Participants
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   *  Urs Dur
      Clarkson Capital Markets - Analyst
   *  Nish Mani
      JPMorgan - Analyst

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Presentation
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 Laura Kowalcyk,  Navios Maritime Holdings Inc. - VP, Corporate Communications   [1]
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 Thank you for joining us for this morning's Navios Maritime Holdings fourth-quarter and year ended 2013 earnings conference call. With us today from the Company are Chairman and CEO, Ms. Angeliki Frangou; President, Mr. Ted Petrone; Chief Financial Officer, Mr. George Achniotis; and SVP of Strategic Planning, Mr. Ioannis Karyotis.

 As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investor section of Navios Holdings' website, at www.navios.com.

 Before I review the structure of this morning's call, I would 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 Holdings. 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 the 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.

 We will begin with formal remarks from the team; and then, after, we will open the call to take your questions.

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

 Angeliki?

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 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [2]
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 Thank you, Laura. Good morning to all of you joining us on today's call. We are pleased to report our results for the fourth quarter of 2013. We had, in the fourth quarter, a positive $42 million of our debt to EBITDA. Through a number of initiatives, we materially reduced our daily cash breakeven to an estimated $7308 per vessel for 2014. Controlling costs was an institutional imperative in 2013, in order to take advantage of any change in the cycle. This low breakeven allows us to position Navios optimally as it provides a margin of safety in a recovering market, and provides reasonable cash flow in any event.

 As we continue to focus on execution, we are returning capital to our shareholders through a dividend payment, and declared a $0.06 dividend for the fourth quarter of 2013, representing a yield of 2.4%.

 Slide 3 summarizes our current corporate structure. The value of Navios' holdings primarily derives from four areas -- the drybulk ship, with an average holdings; and three principal operating subsidiaries. In our view, the whole is still valued at less than the sum of the parts. Our non-public entity, Navios Logistics, recently signed a 20-year contract with Vale to provide storage and transshipment services from which we expect to generate at a minimum $35 million of annual EBITDA.

 Slide 4 shows Navios Group recent access to the capital market. During the market downturn we devoted time to improving on things we could control outside the rate environment. One of these things was our reputation for the ability to have commercial partners and our investors. I think that our disciplined was well received, and consequently allowed us not only to maintain access to prospect, but also to develop access to new forms of capital. We used this access well. In 2013 and 2014 year-to-date, we raised $2.5 billion in the capital markets where there is growth from the equity or debt market. We even developed access to the Term Loan B market, especially with an international fitting company, and the throughput place for our preferred market. We used this money for our created goals and unlocking value for our investors. The Navios Group acquired 49 vessels at cyclical lows. Overall, we increased the Group's fleet by about 50%.

 Slide 5 showcases 2015 as a year of significant growth for Navios Holdings. You can see this most directly in our sale price, which improved by 255%; as well as liquidity was improved by 155%. We also increased our fleet size rather dramatically.

 Navios Holdings also access the high-yield market, raising $750 million; and the [preferred] to our preferred market, raising $50 million. Using our disciplined approach to locate and acquire vessels, we were able to handle $44 million of value appreciation for the vessels acquired in 2013. We take pride in our disciplined process that allows us to make investment decisions during a difficult moment in the second cycle.

 Slide 6 expands on Navios Holdings' activities during 2013. As I mentioned earlier, we used 2013 preparing for better days. We strengthened our balance sheet by financing our secured debt in November. We are -- our coupon by 150 basis points, and expected that one majority by four years until very nearly 2022. More recently, we issued $50 million of 8.75% perpetual preferred stock. This transaction allows Navios Holdings to minimize long-term financing costs by taking advantage of the currently low interest rate environment. While Navios has no obligation to where they redeem the preferred stock, it may if it raises after January 2018.

 In 2013, we took advantage of the cyclical low to dramatically expand our fleet, both through the exit position as well as by [tackling] in vessels. We acquired 22 vessels in 2013, and year-to-date 2014. We also charter in five additional developed built Kamsarmax vessels. These vessels will be delivered to our fleet during Q2 2015 through Q4 2016. The vessels are chartered for a period between seven and 30 years from delivery. The average charter rate for the Kamsarmax vessels is $13,480 per day per vessel. All of these vessels have purchase options.

 The Company has a cash breakeven of $7308 for 2014. This low breakeven provides a margin of safety in a recovering market, and allows to position the Company in an optimum way to take advantage of the upturn.

 Slide 7 -- we have a conservative balance sheet, with net debt to capitalization of 51.3%, and liquidity of about $238 million. Our liquidity should be viewed in the context of our cash requirements. The company has now funded CapEx, and no material debt maturities for five years. As a result, our liquidity is dedicated to expansion opportunities and non-operating needs.

 Slide 8 sets forth Navios' low cost structure. For 2014, we have 51.4% of our vessels, at an average product date at an out rate of $13,408 per day, per vessel. This is well above our fully loaded cost of $12,916 per day, per vessel. For 2015, we have fixed 8.8% of our vessels at the Navios contracted daily charter-out rate of $18,230. We feel comfortable with our guided 2015 position, as it provided the flexibility to charter out vessels at higher rates that will be available during market recovery.

 I remind you, as I do in every quarter, that breakeven analysis includes operating expenses, all operating expenses -- dry docking expense; chartering expense for our chartering fleet; G&A expenses, including credit default insurance expense, as well as interest expense in capital repayments.

 Slide 9 focuses on the Company's chartering strategy. We have found that our chartering strategy is a balance of credit, market, and cycle risk. As an example, we thought that the base rate that provides visibility of revenue and protection on downside risk, with clauses and indexes [making it] to capture market upside. We have 8778 days contracted for 2014, or 51% of all our available days. Of this, 2142 days were contacted at indexed-linked rate, and 6636 days still contracted at fixed rates. Nine of our vessels have been recently fixed for periods chartered designed to capture market upside while mitigating credit risk.

 These charges are designed to maximize profitability in a rising rate environment. It is important to note that for every $1000 movement on the index, it costs $2.7 million in free cash flow, or $0.03 per common share annualized. The cash we [over write], as earning capacity should raise with them to the historical means.

 Slide 10 goes into further detail surrounding the Company's chartering strategy in capturing market upside, while protecting the market downside. Our estimate for 2014 breakeven cost for our fleet, including all costs, is $7308 per vessel, per day, for the open days. Whether the market shrinks upward in large or small movement, our extremely low daily cost rate given rate will allow us to enjoy significant cash flow regardless of market returning to historical norms.

 Based on the current market rate of $17,714 (sic - see slide 10, "$15,174") in a spread day, and using 8315 open days for our fleet, we can add $70 million in free cash flow. However, if the market does experience some mean reversion and the freight reverts back to the historical averages, with our approach for the $20,100 per day for the 20-year rate, and $29,000 per day for the 10-year average rate, we can earn $107 million or $181 million in free cash flow, respectively.

 Instead of a reactionary approach, now it is anticipated the long cycle and we use the (inaudible) to strengthen and grow the Company, creating an operating portion as efficient as possible. As this has illustrated, a combination of our acquiring assets at attractive values and using innovative methods to keep our cost of capital low, we are well positioned as the market begins in the next stage of recovery.

 I would like now to turn the call over to Mr. Ted Petrone, Navios' President, who will take us through Navios operation in the industry perspective.

 Ted?

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 Ted Petrone,  Navios Corporation - President   [3]
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 Thank you, Angeliki. Please turn to slide 11. We acquired 10 vessels in 2013, and two vessels in 2014. We also chartered in five newbuildings on long-term charters, with purchase options for delivery in 2015 and 2016. Our long-term core fleet consists of 64 vessels, totaling 6.3 million deadweight. We are one of the largest drybulk operators in the world. We have 51 vessels in the water, with an average age of seven years. This is 25% younger than the industry average age of 9.3 years.

 Please turn to slide 12. Including the new acquisitions, we have fixed about 51% of our capacity for 2014. The remaining open days are available for [Hochner] in an improving environment. We have fixed 8.8% in 2015. The average daily charter-out rate for our fleet is $13,480 for 2014. The rate for 2015 is $18,230.

 As noted in the bottom left of our slide, our vessels' operating expensed at 39% below the industry average in all asset classes. This reflects, among other things, the significant economies we have achieved with scale. The $2200 daily savings per vessel, as compared to the industry average in operating expenses, aggregates to about $25 million in annual savings dropping directly to our bottom line.

 Please turn to slide 13. The BDI exceeded $2000 during December, as yearly highs for Handys, Supramax and Panamaxes coincided with renewed strength for Cape rates. Preliminary 2013 trade data indicate that total seaborne bulk trade rose by over 6%, led by sizable growth in iron ore, coal, and grain. In volume terms, trade growth of approximately 250 million tons was 58% longer than the average yearly increases experienced during the 2003-2008 period.

 The first few weeks of 2014 have brought about disruptions in cargo availability in a number of commodities and regions. These disruptions arise from a combination of weather-related factors in Brazil and West Australia, and governmental decrees in Colombia and Indonesia. Most of these disruptions are of a temporary basis, except for Indonesian export restrictions, which may continue to affect minor bulk trade.

 Cape rates experienced the sharpest fall from the combination of the above disruptions and normal seasonality. Yet the current average Q1 Cape rate is more than twice that of Q1 2013. A slowing trend in fleet growth, along with significant additional iron ore export capacity in both Brazil and Australia should support earnings, especially in the Capesize sector. Both the Panamax and the Supramax sectors should receive support over the medium- to long-term by Chinese coal and grain imports, with further support coming from what is expected to be a long South America grain harvest.

 A further slowdown in vessel deliveries, combined with a gradual recovery in the world economy, should bode well for improving fundamentals in 2014 and beyond.

 Please turn to slide 14. World GDP continues to be driven by developing economies, which now contribute a higher percentage of total world growth than the developed economies, representing over half of the global consumption of most commodities. The IMF recently increased projected world growth for 2014 to 3.7%. Developing economies are projected to grow at 5.1%. Chinese economic growth is projected at 7.5%. Another significant GDP movement is the shift of Europe from a negative 0.7% in 2013 to a positive 1% projected for 2014. This is about a 2% movement within a short period of time in an economy the size of the US.

 Turning to slide 15, the primary engines of trade growth continue to be China and India. Bulk trade has expanded by an average of 5.5% per year in the 12 years since China joined the WTO. Consensus forecast for full-year 2013 are for global drybulk trade to grow approximately 6%, and ton mile growth of about 7%. Net free growth is expected to the about 5%, leading to favorable supply-demand dynamics for the first time in four years.

 Moving to slide 16, iron ore from the major mines outside of China continues to be the lowest-cost, highest-quality source of this commodity. With iron ore prices forecasted to decline to the $100 range, Chinese domestic production -- represented by the red box in the lower right graph -- will become uneconomic. The current planned expansions of global iron ore mines will add significantly to seaborne bulk commodity movements in 2014, with further significant growth in the following years. While a majority of these expansions are in Australia, over 35% will come from the Atlantic basins, adding to ton miles.

 Moving to slide 17, the continued development and urbanization of China will contribute significantly to steel consumption for the remainder of 2014 and beyond. Infrastructure, housing construction, and consumer spending growth underpin future development. Note that Chinese fixed asset investments continue to grow, at over 20% through 2013. Crude steel production in China for 2013 was up 9%. Chinese iron ore imports for 2013 were up 10%. January imports were a record 86.8 million ton, representing a 32% year-on-year increase. Imported stockpiles, after having risen seasonally, stand at 98 million tons at the end of last week.

 Domestic iron ore production increased by 8% year-on-year. But quality seems to be deteriorating, as effective FE content hovers in the 15% to 20% range compared with 63% FE content of imported ore. Going forward, the substitution of low-quality domestic ore with imported ore is expected to grow, and will increase the tons carried and ton miles.

 Please turn to slide 18. Over the past few years, there has been a significant change in coal trade. China turned from being a net exporter of coal in 2009, only four years ago, to being the world's largest importer today. As the charts indicate, both India and China's seaborne coal imports have grown at least 21% CAGR since 2009. With the increase in steel production and with a number of planned new coal-fired power generators, coal imports in both countries are forecast to grow over the next several years. Just these two countries account for over 35% of all seaborne coal movements worldwide.

 Turning to slide 19, China's grain imports are expected to double from 2012 to 2022, as the country's per capita income rises, leading to an improved diet and increased consumption of poultry and meat. As noted in the bottom of slide 19, it takes about eight tons of grain to produce one ton of beef. Grain shipments, while small relative to iron ore and coal, account for a large portion of investment demand as measured in vessel days, as grain is an inefficient cargo to load and discharge.

 Moving to slide 20, 2013 newbuilding deliveries totaled about 62 million deadweight tons. This number represents the lowest annual total since 2009, and is down by almost 40% from 2012's record. 2013 non-deliveries increased to 38%, bringing net fleet growth down to under 6%. Very early indications for 2014 show a non-delivery rate of 57%, which is higher than the 54% recorded in January of 2013. Net fleet additions this year are expected to be lower than last year. And net fleet growth is expected to be lower than demand growth, resulting in an improved rate environment. The order book declines dramatically this year and beyond.

 Turning to slide 21, low freight rates for most of 2013, expensive fuel, and high shipped scrap prices led to a continued high scrapping levels, as 22 million deadweight tons were scrapped. Scrapping rates for older, less fuel-efficient vessels have continued at the start of this year. Through February 17, about 1.6 million deadweight was scrapped.

 The current rate environment should encourage scrapping of older vessels. About 11% of the fleet is over 20 years old, providing about 80 million deadweight tons of scrapping potential. As demolition prices appear to depend on overall steel prices and not on the supply of vessels, they are expected to remain high. We believe we will continue to see the scrapping of older, less efficient vessels.

 Of note is that the average age of this fleet stopped declining in August, at 9.3 years. This is an indication that newbuilding deliveries have slowed, as we predicted earlier in the year.

 Moving to slide 22, slide 22 provides a retrospective of the rate environment and considers the impact of supply-demand equilibrium on rate recovery for 2014. As we all know, for any rate recovery to be meaningful and lasting, fleet growth rates must fall below trade growth rates. As mentioned earlier, demand for drybulk cargoes is expected to increase for the full year 2014 by over 6%, at rates similar, if not higher, than the expected net fleet growth for the year.

 However, the rate of change suggests that demand for drybulk vessels will increase in 2014 and beyond, as newbuilding deliveries continue to decelerate, and scrapping remains at high levels. In sum, we note that for the first time in five years there is consensus expectation that cargo demand growth should exceed net fleet supply growth.

 This concludes my presentation.

 I would like to turn the call over to George Achniotis, our CFO, to go over our financial highlights and review our subsidiaries.

 George?

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 George Achniotis,  Navios Maritime Holdings Inc. - CFO   [4]
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 Thank you, Ted, and good morning, all. Please turn to slide 23 for a review of the fourth-quarter and full-year financial highlights. Revenue in the quarter increased to approximately $131 million from $128 million in 2012. Revenue from drybulk operations increased by 14% to $80 million, from $70 million in the same period in 2012. The increase is mostly due to a 20% increase in the available days of the fleet; and a 4% increase in the daily time charter equivalent rate achieved in the order, from $12,805 per day in Q4 2012 to $13,291 in 2013.

 Revenue from the logistics business decreased to $51 million in the quarter, mainly as a result of a decrease in the sale of products at the port in Paraguay. I note that this is a low-margin, low-risk, opportunistic, failing business.

 EBITDA for the quarter in both 2012 and 2013 was affected by several non-recurring items. Q4 2012 was affected by the restructuring of our credit default insurance, where we reported a gain of $161 million. Q4 2013 was affected by $37 million write-off of deferred finance costs, due to the refinancing of the secured bond; and approximately $15 million negative equity pick-up from mergers acquisition caused by certain non-reoccurring items have affected M&A's quarterly results.

 Excluding these adjustments, EBITDA for the quarter was $42 million compared to $54 million in the same period last year. The reduction was mainly due to a $19 million decrease in equity for our affiliate companies; $6 million decrease in other income; and $1.4 million increase in direct vessel expenses due to the increase in the size of the fleet. The decrease was mainly mitigated by a $12 million decrease in time charter voyage and Logistics business expenses, and a $3 million increase in revenues.

 I would like to point out that the trend in EBITDA has changed since Q2 of this year, and has been growing quarter-on-quarter. There was a 3% increase between Q3 and Q4, and an 8% increase between Q2 and Q4. The results are reflected in the TCE rates achieved in each quarter.

 Net income for the period was also affected by the same non-reoccurring items that affected EBITDA, and $4 million of accelerated amortization of intangibles in 2012. Adjusted net loss for the period increased from $1 million in Q4 2012 to $18 million in 2013. This variance is mainly attributable to the reduction in EBITDA; an increase of $2.4 million in interest expense due to the issuance of the new bond; and a $1.9 million increase in share-based compensation.

 Turning to the full-year financial highlights, net income and EBITDA were adjusted by the same items affecting the Q4 results, and the sale of Navios Buena Ventura to Navios Partners in 2012. That reduced to $160 million from $238 million in 2012. The main reason for the decrease was the reduction of the TCE rate achieved in the period. I would like to remind you that for most of 2012, prior to the credit default insurance restructuring, we were reporting as income the daily rate of insurance proceeds. Thus, the TCE rate actually in 2012 was $18,167 per day compared to $12,029 in 2013.

 Furthermore, there was a decrease of $14 million in net earnings for our affiliated companies. The decrease was mainly mitigated by $25 million of reduction in time charter, voyage and Logistics business expenses; $7 million reduction in G&A expenses; and $6 million reduction in direct vessel expenses. EBITDA of Navios Logistics increased by over 18% to $57 million from $48 million in 2012.

 Adjusted net income for the year reduced from $19 million in 2012 to a negative $57 million in 2013. The decrease is mainly attributable to a decrease in EBITDA and an increase in interest expense. The decrease was partly mitigated by $6 million decrease in the [precision] amortization, and a $5 million increase in income tax benefit from Navios Logistics.

 Please turn now to slide 24. We continue to maintain a strong balance sheet, with low leverage and a healthy cash balance. At December 31, 2013, we had $190 million in cash compared to $283 million at December 31, 2012. The current portion of long-term debt reduced from $33 million at year-end 2012 to $19 million at the end of December 2013. The long-term portion of our bank debt also decreased to $199 million compared to $291 million at the end of 2012, following the early debt repayments from the proceeds of the new 2022 senior notes issued in November of 2013.

 Senior notes increased by $259 million, after the refinancing of our 2017 bond, and they add on to the Navios Logistics bond in March of 2013. Following the recent refinancing of our 2017 bond, we don't have any significant debt maturities until 2019.

 The net debt to full capitalization ratio remains low, at 51%. This is a lower ratio for a shipping company operating in a capital-intensive industry. I would also like to remind you that the full market value of our investments in our affiliate companies is not reflected on our balance sheet. If these investments were valued at the current market values, our leverage ratios would be even lower.

 Turning to slide 25, the Company continues to provide a return to its shareholders through its dividend, which has been paid continuously from the first full quarter it went public. A dividend of $0.06 per share was declared to common shareholders as of March 20, to be paid on March 27. I would also like to point out that the expected annualized cash dividend inflows from our ownership in Navios Partners and Navios Acquisition is approximately $45 million. These exceed the annual dividend paid out by Navios Holdings by $20 million.

 We now briefly review our subsidiaries. Please turn to slide 26. From the latest equity raising of Navios Partners, we currently own just over 20% of the company, including a 2% GP interest. Navios Partners operates a fleet of 30 vessels with an average age of 6.7 years. Since its inception in 2007, Navios Partners' fleet has grown by almost 4 times, from eight vessels to 30.

 Please turn to slide 27. 2013 was a transformative year for Navios Partners, as the Company entered into the container sector with acquisition of five vessels with 10-year charters. It opened up a new source of financing in the Term Loan B market and increased its fleet size by 43%. This has resulted in significant price appreciation by almost 40% since the beginning of the year. The result was to solidify the cash flow generation, which has enabled the company to provide comfort on at least the existing level of dividends for 2014 and 2015.

 Please turn to slide 28. Navios Partners provides significant cash flow to Navios Holdings. Since its start of operations, Navios Partners has grown distributions by over 26%. And through 2013, we received about $136 million in distributions. In 2013 alone, we received about $29.5 million in distributions from partners. This exceeds the dividends that Navios Holdings has paid to shareholders by almost $5 million.

 In addition to the distributions, there has been an 149% appreciation of our investment partners, which, as mentioned earlier, is not reflected on our balance sheet.

 Please turn now to slide 29. Following the latest equity raising of Navios Acquisition, we have approximately 46.4% economic interest in the company. Navios Acquisition currently consists of 43 tanker vessels. 35 vessels are currently in the water, with an average age of four years. We anticipate that NNA's newbuilding program for seven product tankers, and the recent acquisition of three modern VLCCs, positions the company to take advantage of favorable long-term [investment] dynamic.

 Turn to slide 30. 2013 and year-to-date, NNA raised almost $1 billion in the capital markets to fuel further growth. The fleet grew by almost 50% with the addition of 14 vessels at historically low prices. The value appreciation of these vessels alone was 21%, or over $100 million by the year-end. The equity raisings increase the liquidity of the stock by 210%. And there was a significant upside in the performance of the stock, with almost 80% increase in the share price since the beginning of the year. Last week, Navios Acquisition priced its latest public offering of approximately 15 million shares, and raised an additional $57.6 million.

 Turning to slide 31, the next slide shows how NNA's fleet has grown since 2011, and how this will continue to grow as newbuilding vessels deliver into the fleet over the next 18 months. Available days have more than trebled in three years, from just over 4000 in 2011 to over 13,500 in 2014. And they will grow to over 15,500 in 2015, when all vessels deliver into to the fleet.

 As a result of this, EBITDA has grown by 67% between 2011 and 2013, and will continue to grow as NNA takes delivery of new vessels this year and next.

 Please turn to slide 32. Navios Acquisition provides significant cash flow to Navios Holdings. Including their 2013 dividend, Navios Acquisition has provided about $20 million in distributions since its start of operations. The value of holdings interest in Navios Acquisition has also grown by almost 30%. And this concludes my presentation.

 At this point, I will turn the call over to Ioannis Karyotis for his review of the Navios South American logistics results.

 Ioannis?

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 Ioannis Karyotis,  Navios South American Logistics Inc. - SVP, Strategic Planning   [5]
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 Thank you, George. Slide 33 provides an overview of Navios Logistics, in which Navios Holdings owns a 63.8% stake. Navios Logistics has three segments -- post terminals, barges and cabotage. We are one of the major logistics providers in the Hidrovia region of South America. We have significant opportunity to grow our business and maintain a focus on developing contract revenues from a portfolio of high-quality clients, providing visible cash flows.

 Please turn to slide 34. As we have already announced, we have secured a 20-year agreement with Vale International, a significant subsidiary of Vale S.A., for the storage and transshipment of iron ore. We will need to invest approximately $150 million to expand our port terminal infrastructure. We are currently working on the regulatory approval process in order to start construction.

 In February 2014, we ordered three newbuilding pushboats from a Chinese shipyard to be delivered in Q1 2015. Those acquisition costs for these pushboats, including estimated transportation cost, is $26.1 million or $8.7 million per pushboat. These three pushboats will be used to service the previously announced six jumbo barge convoys. Four convoys have already been time chartered out at $14,500 per day per convoy for a six-year period.

 Please turn to slide 35. In the past four years, revenue has been growing at an 8% CAGR. If we focus on our core activities, you will see that time charter voyages and port termimal revenues have been growing at 11.7% CAGR. Our trading activity in our liquid port [captured] a series of products was lower in 2013, affecting total revenues. During the last four years, EBITDA has been steadily growing at a 20.5% CAGR.

 Please turn to slide 36 to discuss the results for the fourth quarter and the 12 months ending December 31, 2013. Our EBITDA for the fourth quarter was $14.3 million or 31% higher than Q4 2012. Net income for the period was $0.3 million compared to a net loss of $0.8 million in Q4 2012. Port segment EBITDA increased by 39% to $7 million, due to more historic revenue in our dry port [appreciably] to better rates in minimum guarantees from our clients.

 The decrease in revenue is attributed to lower sales of fewer products in our liquids port, as we are forming them in Q4 2013 compared to $17.9 million in Q4 2012. Since this is a complementary low-margin trading activity, it did not have a significant impact on EBITDA. Thus, business EBITDA was $5.9 million in Q4 2013 compared to $3.4 million in the same period last year. The increase is attributed more revenue from larger volumes of liquid and dry cargo transported in the quarter.

 Cabotage business EBITDA was $1.4 million in Q4 2013 compared to $2.5 million in Q4 2012, mainly due to more off-hire days in the quarter. Interest expense and finance cost, net, increased to $6.4 million in Q4 2013 compared to $4.5 million in Q4 2012, due to the add-on to the bonds in March 2013.

 Depreciation and amortization expense was $5.7 million in Q4 2013 compared to $6.9 million in Q4 2012. Our net result was also affected from -- by $0.7 million higher tax expense compared to the same period last year. The 12-month period ending December 31, 2013, reflects our consistent EBITDA growth. EBITDA grew 18% compared to the same period last year, with positive contribution from all three segments. Net income was $9.7 million, up from $0.2 million in the 12-month period of 2012.

 Please turn to slide 37. Slide 37 shows our strong balance sheet. As of December 31, 2013, cash was $86.6 million compared to $45.5 million at the end of 2012. Net debt to book capitalization was 36% compared to 33% at the end of 2012, because of the add-on to the bond in March of 2013.

 As of the end of 2013, the remaining CapEx for the acquisition of the seven barges and the six pushboats is approximately $70 million.

 Now I would like to turn the call back to Angeliki.

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 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [6]
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 Thank you, Ioannis. And we open the call to questions.



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Questions and Answers
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Operator   [1]
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 (Operator Instructions). Urs Dur, Clarkson Capital.

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 Urs Dur,  Clarkson Capital Markets - Analyst   [2]
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 Good morning, you guys -- because I believe you are all in New York. So we will see you this afternoon, and congratulations on the 60th birthday.

 Navios South American Logistics -- and I'm just looking at this first glance, so just against where they were revenue-wise last year as opposed to this year, I believe it looks modestly similar. But the EBITDA has grown. Can you describe a little bit as to how you have been able to achieve what can be viewed, I suppose, as a success there?

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 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [3]
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 I will let Ioannis go through these, but the reality is that our margin now is very strong. And we see our port really generate quite a substantial EBITDA, with a growth year-on-year of almost 40% increase you have. And of course, our barge business has grown very nicely.

 I will let Ioannis go through the details.

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 Ioannis Karyotis,  Navios South American Logistics Inc. - SVP, Strategic Planning   [4]
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 So, the small decline that you see in the revenue line is only attributed to the sales of liquid products in our port in Paraguay. This is a low-margin trading activity. I would have articulated in the past is a complementary activity of our core activities, the storage activities. And this is why it does not affect the EBITDA.

 The increase in EBITDA is mainly attributed to the dry port that has grown very nicely this year on the back of increased size and better contracts; and, naturally, the improved activity of the barge business and the cabotage.

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 Urs Dur,  Clarkson Capital Markets - Analyst   [5]
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 Excellent. And can you give us any guesstimate as to when the expansion for the Vale contract will be completed, and as to when we should model that to come online?

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 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [6]
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 If you remember, we are already in the process of the regulatory approvals, plus organizing all the designs and everything on the ports. So the two parallel processes that we have. So we believe that the second half of 2015 will be the appropriate time. And don't forget that we will also have an increased EBITDA due to the barges, the six convoys that are coming. Three are coming very soon, starting in Q2, and the rest coming later. So there will be an incremental EBITDA.

 Another thing I want to mention is that the 20% growth that we saw year-on-year is coming really from organic growth. We didn't have any additional things added during 2013. So you see that the real growth in the Company coming to owned operations. This year, we will be positively affected by the conveyor belt that came in in Q4, on October of 2013; and the convoys that are coming through the year.

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 Urs Dur,  Clarkson Capital Markets - Analyst   [7]
------------------------------
 Excellent, that's very helpful. Getting back over to the drybulk side of the equation a little bit -- for all of you, I guess -- asset values don't seem to be coming down. But we have, at the very current moment, a very weak freight rate environment. And we know that iron ore inventories have perked up significantly in China, and iron ore prices have come down.

 Angeliki, or Ted, or whoever wants to tackle this -- how do you expect the curve of iron ore inventories in China to look over the next six to eight months? Do you expect -- you mentioned this in terms of the iron content percentage, Ted. But how do you expect it to be consumed over the course of this year? And then, do you expect, yet again, another surge in freight rates for the fourth quarter, especially given the delivery schedule of ships seems to slow down over the course of this year? What is your view on how the rate curve looks this year?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [8]
------------------------------
 Let me give you the view from Navios' side, and then from the way we [add it] up. And Ted will take us through the industry. The reality is that Navios -- even if you take the seasonally low -- which let's say the lowest was about 1000, nearly 1000 in the BDI -- we have seen that from the lows of [stemary] recovery. What we are also seeing right now, which is a reality, is that one-year chartered on Cape side, you saw a recent picture of 27,000. 16,000 comes from Maxis and 13,000 from Panamaxes, and really moving up. That means market has come up from the low -- the BDI is about 1160, meaning that you already have a more than 10% bounce from the bottom.

 Now this is great position with the breakeven of $7300 per day to be comfortable in any market. So even in today's current market, we are generating nice cash flows of about $70 million with the ability to really grow, if you go to the 10-year averages and the 20-year averages and 10-year averages.

 So from point of where we are, this is a very comfortable position because we can withstand even the worst markets.

 Now Ted is going to take you really how, I don't know, it can play out through the year.

------------------------------
 Ted Petrone,  Navios Corporation - President   [9]
------------------------------
 Thanks, Angeliki. Urs, I think, as you said well, there's some inventory buildup due to some loan issues. But this is a normal event to happen in China. They have stocked up for the winter. They have their iron ore inventory. But if you have seen the steel production the first 10 days in February, it's very good. Then steel exports have been up dramatically in China. They seem to be going -- they will take some time to chew through this inventory. And when the prices get down, some of this inventory may stay on the stockpile, as it usually does, as they import more from Australia and Brazil. And a lot of the stockpile, as we know, came from more seaborne iron ore. So we expect the price to come down. We expect the high-end Chinese domestic production in iron ore to continue to go down.

 Colombia will come back on in March, on the coal issue. The weather will get better, as it usually does -- you know, Australia and Brazil have a rainy season. And I think the Capes will follow along with what we think is a good grain harvest coming in the southern hemisphere. So I think, look at -- you know the forward curve as well as anyone else. All signs are pointing for -- to be -- to continue to increase as it goes through the year. It appears to me we may have just bottomed, just recently, on the BDI.

------------------------------
 Urs Dur,  Clarkson Capital Markets - Analyst   [10]
------------------------------
 Great. And that's good, and appreciated. There have obviously been -- maybe it's a rhetorical question. But then, if your view is that the strengthening rates; but even after this weakness, you don't see any weakening at all in asset values. If anything, you see strengthening. Correct?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [11]
------------------------------
 Yes. Asset values has also to do with fear and greed, and the more a longer-term kind of positioning. So it's not only this forward market. It really is driven more by the animal spirit of people.

 So I will say that you may have some kind of a volatility, not particularly -- I don't see it happening right now. But you may have that. This is a totally fear and greed situation. And if that happens, maybe not -- you don't see values dropping. But what you will see maybe is a breather, having a period that nothing is happening; that, too.

------------------------------
 Ted Petrone,  Navios Corporation - President   [12]
------------------------------
 I think as you go forward, in terms of the S&P value -- think of the order book. If you take out the normal 30% non-deliveries, you are down to maybe 12% of the fleet that's on the water. I think that's a big factor, to also keep the asset values at least even, if not going higher.

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 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [13]
------------------------------
 The longer-term trend has nothing to do with what you may have as a volatility in between.

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 Urs Dur,  Clarkson Capital Markets - Analyst   [14]
------------------------------
 I tend to agree with that. And I think that's what is holding up a lot of the stocks. I really appreciate your time, and thank you very much, guys.

------------------------------
Operator   [15]
------------------------------
 Chris Combe, JPMorgan.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [16]
------------------------------
 This is Nish Mani on for Chris. I just wanted to follow up on a few questions about the drybulk segment. You guys have obviously been very acquisitive in 2013, and year-to-date in 2014, in terms of adding new vessels. And I wanted to get a sense for you guys in terms of fleet mix, where you see additions on the increments coming along here. Do you have a bias towards Capesize? Or you guys mentioned the grain trade. So are you looking at smaller vessels increasingly? And just wanted to get a sense of how you look at the sub-segments together.

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [17]
------------------------------
 Actually, we apply all size. If you remember, we had a large Cape expansion, then we did all the Handymaxes, and now Panamax. So we like all the sizes. And also it has to do with what we potentially will be adding placement later on. So we like all the assets. And don't forget that today we also did not only director positions, which (inaudible) doing secondhand last year, doing a business this year. And we did also five long-term charter-in vessels with purchase options, all of them. And in today's environment, you can see positive spread [day one]. We have a $13,500 chartering rate; $16,000 is the charter-out rate. So you are in a good position. So we like all type of sizes, and it really depends on the replacement of our assets.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [18]
------------------------------
 Okay, and you mentioned the charter-in additions. Do you guys see this as a way of playing the asset cycle through low-leverage and low-capital commitments? Or is this going to be increasingly a large part of your strategy going forward, to increase the amount of long-term charter-ins?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [19]
------------------------------
 This is a strategy now we have had for a long time. If you remember, we had about one-third of our fleet in long-term charter-in. We always like to have the purchase option, which provides us a great flexibility, and is like a new business with no capital outlay. And this is something that is always part of -- and this is a period where we will replenish this long chartering fleet because we find it appropriate; with the volumes and everything, this gives us an additional rate. I think of the following: the [five counter] markets is over $170 million expansion. And, in essence, you do it with no capital outlay at all.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [20]
------------------------------
 And turning to cash flow and dividends policy, you had mentioned that the dividend that NM pays out is relatively small compared to the proceeds you guys get, the cash you guys receive from the subsidiaries. Can you walk us through some of the rationale you guys investigate internally about potentially increasing the dividend, or creating a higher-yield instrument for investors?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [21]
------------------------------
 I think there is a lot of other papers for Navios where you get the yield. Navios Holdings is a growth company, and it's where you have maximum of deals and everything that we organize. But there is other part of our cabotage actuals that you can enjoy the yield and the safety.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [22]
------------------------------
 Yes. Okay, makes sense. And then finally, just the logistics -- I know you guys have been very public in the past about potentially eventually spinning off the NSAL business, if that's something the capital markets cooperate. Can you give us some preliminary signs or benchmarks along the way that you guys would see as being supportive of such a transaction?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [23]
------------------------------
 I think we have articulated our strategy there. In an appropriate time, we will come out with other thing. There is a major CapEx and a major project to be done. So baking in this EBITDA will be very important.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [24]
------------------------------
 Right. And, realistically, you would see the full integration of the Vale contract before potential capital market activity?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [25]
------------------------------
 We cannot -- this is something to be seen. But, definitely, you want to see -- you have a material project.

------------------------------
 Nish Mani,  JPMorgan - Analyst   [26]
------------------------------
 Okay. That's very helpful. Thank you so much for your time, guys.

------------------------------
Operator   [27]
------------------------------
 Chris Wetherbee, Citi.

------------------------------
Unidentified Participant   [28]
------------------------------
 This is Alex in for Chris. Just a question on fleet expansion. More specifically, do you see more opportunities across different asset classes, such as container ships? Or will drybulk ships remain the focus?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [29]
------------------------------
 Navios Holdings, through the -- we have a stake with the containers in Navios Europe. And as Navios Group, we have a view on the containers. There will be opportunities. And I think this is something that may continue, as we see that this is the asset class that is also more beaten up right now.

------------------------------
Unidentified Participant   [30]
------------------------------
 Okay, thanks. And rates is -- we're used to talking about rates for quite a bit. And you stated that you see near-term improvement. But at what point would you find longer-term charters more favorable?

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [31]
------------------------------
 This is a good question. And you will see, as you will have margins normalize, you will see spreads on the longer-term create much more great cushions, because people will go for the longer-term. And this will be a process that we will be seeing, that the market becomes healthier, the fear goes away, and you have more of the Greek dominating the market. So you will see the longer-term.

 From Q4 last year, we saw period markets picking up from almost nothing. And now we see more and more this becoming an opportunity. And as we see with the Capesize, we saw the one -year time charter moving to $27,000. And there will be a point where the two-year markets will open up, and the space will start being created. This is a kind of situation that as you move, let's say the 20-year averages for Capesize is around $30,000; Panamax around$18,000; and Supramax around $16,000. So as you become more to that level, you will see people taking longer views and longer charters.

------------------------------
Unidentified Participant   [32]
------------------------------
 Okay, great. That's all for me.

------------------------------
Operator   [33]
------------------------------
 At this time, there are no further questions. I will now turn return the call to Angeliki Frangou for any additional or closing remarks.

------------------------------
 Angeliki Frangou,  Navios Maritime Holdings Inc. - Chairman, CEO   [34]
------------------------------
 Thank you. This completes our Q4 results.






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