Navios Maritime Partners L.P. 2026 Q2 Earnings Call

Angeliki? Good morning, and thank you all for joining us on today's call.

I am pleased with our results. For the second quarter and first six months of 2026, we reported net income of $167.9 million and $274.3 million. EBITDA of $275.2 million and $487.8 million. Earnings per common unit of $5.78 and $9.42. We also announced a $0.06 distribution per unit for the quarter. We continue to operate in a world marked with uncertainty and conflict. The war between Russia and Ukraine remains unresolved. The persistent attacks in the Strait of Hormuz and more recent ones in the Red Sea have caused persistent disruptions to global trade flows. Against this backdrop, trade has been surprisingly resilient, and energy prices, while volatile, remain relatively muted. These conflicts are causing lasting implications for global trade patterns. Countries and companies are reassessing their exposure for critical resources to maritime choke points.

They are placing greater value on supply chain resilience, looking to diversify through alternative suppliers, routes, storage capacity, and transportation infrastructure. This trend may have a net effect of creating longer long-haul routes. As you can see on slide 3, our fleet has an average age of 8.7 years compared to an industry average of 13.7 years. Our tanker fleet, with an average age of five years, is particularly young relative to the broader tanker market. Overall, Navios' fleet modernization program has created a fleet with almost 40% younger than the industry average and about 65% younger in comparison to the global tanker fleet, preparing us for the future. We believe the use of our fleet provide a competitive advantage through, among other things, lower operating costs, better fuel efficiency, and higher charterer preference. Please turn to slide 4.

Navios is a leading maritime transportation company, owning, operating, and chartering a modern fleet of 176 vessels across three segments and 15 asset classes. Our fleet is split into thirds by value, with about one-third in each of the tanker, dry bulk, and container segments. The overall value of our fleet, including our new building program, is $10.2 billion. Our fleet in the water has a $4.8 billion in net vessel equity value. We continue to make headway in reducing our net LTV towards our target of 20%-25%. At the quarter end, we had a net LTV of 27.9%. Our balance sheet is strong, with $625 million available liquidity and credit ratings of Ba3 from Moody's and BB from S&P. Please turn to slide 5. Diversification is a core strength of Navios, and our platform provides optionality across markets.

We complement this flexibility with a disciplined risk management culture, continuously monitoring and assessing our exposures, diligently evaluating and structuring transactions, and maintaining robust insurance coverage, particularly important in a war risk environment. Please turn to slide 6. Since the beginning of the year, we have acted to capitalize on a robust tanker market and reposition our VLCC fleet for both the current cycle and the years ahead. We initially sold two 16-year-old VLCCs for an aggregate amount of $136.5 million. These sale prices were approximately 18% above the prior historical peak for vessels of this age. We subsequently acquired seven newbuilding VLCCs for an aggregate purchase price of $844 million, including the one vessel that remains subject to ongoing discussions. We have entered into period charters for these vessels for average periods of 6.1 years at an average net daily rate of $45,224.

These transactions allow us to rebuild our VLCC fleet with modern tonners supported by long-term employment. The associate charter arrangements are expected to generate approximately $700 million of revenue while reducing our residual value exposure measured at the end of the initial charters to roughly 40% below the 20-year historical average. Across the entire tanker segment, we have secured a total of $922 million of contracted revenue from 14 vessels with an average charter duration of approximately five years. Of this total, $893 million relates to 11 newbuilding tankers. This strategy enhances cash flow visibility, modernizes the fleet, and positions the company to benefit from the current tanker market strength while retaining substantial upside for the next cycle. Turning to our dry bulk segment, there we are systematically rotating into larger, more fuel-efficient vessels while increasing the quality and visibility of our contracted cash flows.

We sold two Panamax vessels with an average age of 18 years for aggregate proceeds of $22.8 million. We then reinvested in three newbuilding Capesize vessels for an aggregate purchase price of $204 million. Two of these Capesize newbuildings have been fixed on five-year charters, providing a minimum of $86 million in contracted revenue in addition to profit-sharing potentially. Across the dry bulk fleet, we have secured $125 million of minimum contracted revenue from four vessels with an average charter duration of approximately three years. In container ships, our focus is on harvesting the value of contracted backlog while preserving flexibility for future capital allocation. We sold two 4,730 TEU vessels with an average age of 19 years for an aggregate proceeds of $64.5 million.

The remaining fleet continues to provide meaningful cash flow visibility, with $194 million of contracted revenue secured across six vessels with an average remaining charter duration of approximately three years. Overall, we have been monetizing mature assets at attractive values while building and maintaining contracted earnings and optionalities as charter markets and asset values evolve. Please turn to slide seven, where we outline our recent developments. For the second quarter, revenue was $410.2 million. EBITDA was $275.2 million. Net income was $167.9 million. Earnings per common unit were $5.78. In terms of our balance sheet, net LTV was 27.9%. Half of our total debt of $1.3 billion has no LTV covenant. 43% of our total debt is fixed rate. Our debt has a staggered maturity profile with no near-term refinancing cliff. We have $1.9 billion of debt-free vessel values across 55 vessels, representing potential incremental financing capacity.

Available liquidity totaled $625 million. Contracted revenue backlog was $4.4 billion, extending through 2037. For the second half of 2026, contracted revenue exceeded projected cash operating cost by $151 million. As of August 12, 2026, Navios has 6,250 open or index-linked days in 2026, preserving participation in the stronger spot markets while maintaining a substantial contracted earnings base. Please turn to slide eight. Navios Partners announced a new $200 million common unit repurchase authorization, double the size of our current program. We view this program as an important tool for creating value for our common unit holders, particularly when our units trade at a meaningful discount to underlying NAV.

In allocating capital to a unit repurchase program, we consider the relative attractiveness of alternative uses of capital, including the availability of investment that can enhance long-term cash flow generation, the preservation of liquidity, maintaining prudent leverage, and safeguarding balance sheet strength. All of this must be considered in the context of an industry that suffers change quickly. Since the current program began in the second quarter of 2024, the company has repurchased 1.9 million common units for $92.6 million, including 135,846 units for $9.8 million in the second quarter of 2026. During the last 12 months, we returned $46 million of capital to our unitholders, of which $6 million was cash distribution in addition to $40 million of units repurchases. Overall, the program has created a $6.30 per unit of accretion.