First Quarter 2016 Earnings Presentation

Transcription

1 First Quarter 2016 Earnings Presentation April 27, 2016

2 Forward-Looking Statements This presentation contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and expectations, including with respect to Navios Midstream s future dividends and Navios Midstream's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "may", "expects", "intends", "plans", "believes", "anticipates", "hopes", "estimates", and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Midstream at the time this presentation was made. Although Navios Midstream believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Midstream. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us, tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, the aging of our vessels and resultant increases in operation and drydocking costs, the loss of any customer or charter or vessel, our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all, increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses, the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business, potential liability from litigation and our vessel operations, including discharge of pollutants, general domestic and international political conditions, competitive factors in the market in which Navios Midstream operates; risks associated with operations outside the United States; and other factors listed from time to time in the Navios Midstream's filings with the Securities and Exchange Commission including its Form 20-F s and its Form 6-K s. Navios Midstream expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Midstream's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Midstream makes no prediction or statement about the performance of its common units. 2

3 Overview of Navios Midstream 100% Membership Interest Navios Maritime Acquisition NYSE: NNA Common Unitholders Navios Maritime Midstream Partners GP LLC (General Partner) 58.85% Limited Partner Interest 39.15% Limited Partner Interest 2.0% General Partner Interest Incentive Distribution Rights Navios Maritime Midstream Partners L.P. (NYSE: NAP) 100% Membership Interest Navios Maritime Midstream Operating LLC 100% 100% 100% 100% 100% Shinyo Ocean Shinyo Kannika Shinyo Saowalak Shinyo Kieran Nave Celeste 100% C. Dream 3

4 Company Highlights Visibility through Long- Term Charters with Strong Counterparties Pipeline & Cash Flow Growth Conservative Credit Ratios and Strong Asset Coverage Sponsor Provides Strategic Relationships and Scale & Seasoned Management Team Strong Tanker Market Environment Over $500.0 million in long-term contracted revenue with top-tier companies 100% fixed for 2016 and years average charter period with strong counterparties Upside potential through profit sharing ~ $1.7 million in Q Options for five VLCC vessels provide significant fleet and distribution growth Right to acquire from Navios Group any crude, product, LPG or chemical tanker with five+ year charter Actively surveying market for third party acquisitions Net Debt to Book Capitalization = 33.6% (Q1 2016) Navios Group has proven market access to debt and equity capital markets Sponsor has strategic relationships with customers, shipyards, banks and other key industry players Economies of scale provide operating expenses 8% lower than industry; fixed until November 2016 Management team has average industry experience of 20+ years per person Average VLCC earnings 2016 YTD = $57, % increase in average VLCC earnings 2015 over 2014 to $64,846 per day Increasing demand for seaborne transportation of crude oil (volume & distances) Healthy market encourages long-term employment fixtures Charterers prefer to deal with large, safe and reliable owners 4

5 NAP is a Solid Company 100% fixed for 2016 and 2017 Upside through profit sharing: $8.0 million for 2015 $1.7 million for Q No committed growth capex No debt maturities until 2020 Significant cash flow generation Ability to increase distributions once the MLP and energy markets normalize 5

6 (DWT) Navios Maritime Midstream Partners L.P. Proven Ability for Cash Flow Growth Additional Growth Opportunities Purchase Options for 5 VLCCs 3,256,423 4 VLCCs at IPO 1,163,636 2 VLCCs Acquired 298, , , , , , ,178 Right to acquire any crude, product or chemical tankers with 5+ year charter from Navios Group (NNA s fleet includes 30 product & chemical tankers + eight VLCCs) 297, ,000 Acquisitions from 3 rd parties 287, ,395 Shinyo Kieran C. Dream Nave Shinyo Saowalak Celeste Shinyo Kannika Shinyo Ocean Nave Galactic Nave Quasar Nave Buena Suerte Nave Neutrino Nave Electron Total Charter-in tonnage 50% Fleet increase since IPO / Built-in growth through dropdowns 6

7 ($ million) Navios Maritime Midstream Partners L.P. Liquidity March 31, 2016 ($ million) Debt Maturity Cash 38.0 Debt (1) Partners' Capital Capitalization Net Debt / Capitalization 33.6% (1) Net of deferred finance cost and discount. 7

8 Q Earnings Highlights (in $ million) except active vessels and available days Earnings Highlights Three Months Period Ended March 31, 2016 Three Months Period Ended March 31, 2015 Revenue % EBITDA % Net Income % EPU % Operating Surplus % Replacement and Maintenance Capex Reserve PoP % Active Vessels % Available Days % EBITDA represents net income plus interest and finance costs plus depreciation and amortization and income taxes. EBITDA is presented because Navios Midstream believes that EBITDA is a basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Midstream s ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. EBITDA is a non-gaap financial measure and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation. Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated maintenance and replacement capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Midstream s capital assets. Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership s ability to make quarterly cash distributions. Operating Surplus is not required by US GAAP and should not be considered as an alternative to net income or any other indicator of Navios Midstream s performance required by US GAAP. 8

9 Balance Sheet Highlights Selected Balance Sheet Data (in $ million) March 31, 2016 December 31, 2015 Cash & cash equivalents Other current assets Intangible assets Vessels, net Total Assets Current liabilities other than current portion of long term debt Long term debt, net of deferred finance cost and discount Total partners capital Total liabilities & partners capital Net Debt / Book Capitalization 33.6% 33.5% 9

10 Q Cash Distribution Cash distribution of $ per unit for Q ($1.69 annualized) Record Date: May 6, 2016 Payment Date: May 12, 2016 Operating Surplus: $11.3 million Total Unit Coverage: 1.29x Common Unit Coverage: 2.86x Distribution: ~$8.7 million $3.9 million to Common Units $4.6 million to Subordinated Units and Subordinated Series A Units $0.2 million to GP Units Tax efficient status distributions reported on Form

11 Long-Term Charters Provide Stable and Visible Cash Flows 5.1 years of average charter period with strong counterparties VLCC Year Built Net Charter Rate Profit Share Charter Period Strong Counterparties Nave Celeste 2003 $42, Years Shinyo Ocean 2001 $38, Years DALIAN Shinyo Kannika 2001 $38, Years C. Dream 2000 $29, Years Shinyo Saowalak 2010 $48, Years Shinyo Kieran 2011 $48, Years Significant upside through profit sharing ~ $1.7 million for Q Note: Remaining employment term includes backstop commitment from NNA as applicable 11

12 Low Breakeven Costs Fully Loaded Cost Revenue % Fixed $41,537 (1) Cost $18,742 $934 $5,796 $1,248 $10,764 Efficient, Low Cost Operator Average Daily Operating Costs / Vessel (excluding dry-docking) Opex is approximately 8.2% less than the industry average Opex fixed until end of 2016 Navios Midstream benefits from fixed operational cost (2) Opex (in $/day) Average Contracted Daily Charter-Out Rate Opex (incl. drydocking) Interest Expense Capital Repayments G&As $10,347 $9,500 Significant upside through profit sharing; $0.08 additional free cash flow per unit in Q Industry Average per Vessel (3) NAP Average per Vessel Total Available Days of Fleet: 2,196 for 2016 (1) Assumes only base rates for the remaining 9 months of 2016 (2) Excluding dry-docking (3) Source: Drewry and company filings. 12

13 Healthy Spot Market Provides Long term Time Charter Opportunities Avg. VLCC Earnings Avg. 3 yr. TC Rate Jan-Apr 2016 Jan-Apr $18,621 $30,015 $64,846 $55,027 $57,469 $23,400 $30,200 $42,700 $41,941 $38,750 4% YoY increase in average VLCC Spot rates YTD 3 year time charter rates YTD remain at levels above 20 years average ($37,000) Time charter rates follow spot market seasonality Spot VLCC Rate Seasonality $/day 200, , ,000 50,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20 yr Min 20 yr Max 20 yr Avg Source: Clarksons Note: Data presented for 2016 are through April 22 th $/day 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, year Time Charter Rates (Jan Apr) Jan Feb Mar Apr

14 % change (year on year) Navios Maritime Midstream Partners L.P. Global Oil Demand: Growth Continues Global oil demand is driven by GDP growth The IMF projects global GDP growth of 3.2% for 2016 and 3.5% for 2017 Global oil demand rose by 1.8 mb/d to 94.7 mb/d in 2015 (1.9% increase) and is expected to increase by another 1.2 mb/d or 1.2% this year to 95.9 mb/d In 2015, the IEA increased its 2015 global oil demand projection eight times Lower oil prices are a positive factor for oil demand Onshore storage limits are contributing to higher floating storage, particularly in China Global Oil Demand ( ) (mm b/d) 30 Year Global Oil Demand and GDP Growth Jan-16 estimates Apr -16 estimates World GDP (IMF) Oil Demand (IEA) P 2015E 2016E -4 Source: International Energy Agency April, IMF April 2016, The Economist. 14

15 P Billion Ton Miles Navios Maritime Midstream Partners L.P. Asia is the Dominant User of VLCC Vessels Asia VLCC ton-mile development Oil supply volume to China increased from AG, West Africa, South America and Caribs 2001 to 2014 Tons shipped from WAfr + S America requires more ships due to the longer trade distance 1, Miles moved per ton transported to China (1) : Arabian Gulf West Africa S America 5,500 t m 9,650 t m 11,500 t m WAF+S America AG Spot VLCC fixture development (2) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0.9% 1.5% 0.2% 8% 8% 8% 8% 24% 26% 31% 32% 67% 65% 61% 60% YTD2016 Source: Drewry, IEA MTOM Report Feb 2015, Clarksons (1) Average ton miles based on 2014 tons transported to China (2) East / West based on whether discharge port is East or West of Suez * YTD: April 7 th West - West East - West West - East East - East Long haul trade drives ton mile increase YTD * 2016 vs YTD 2015 comparison: West East trade fixtures increased 4% in 2016 compared to 2015 YTD East West fixtures decreased 28% in 2016 compared to 2015 YTD Total spot fixtures decreased by 17% reflecting increased refinery maintenance in 1Q16 15

16 Barrels per person per year Navios Maritime Midstream Partners L.P. Growth in Chinese per Capita Consumption Leads to Significant Increase in VLCC Fleet Chinese Crude Oil Imports ( ) Oil Consumption per Capita by Region 9 8 mbpd 14% CAGR Jan 09 to Mar US Brazil W Europe China India Japan South Korea Current Chinese per capita oil consumption is 3.0 barrels per year Per Capita Ratios: US/China 7.3x Europe/China 3.4x World/China 1.6x China consumption goes to: Additional mbpd Additional VLCC (1) US per capita usage ,144 Europe per capita usage ,176 World per capita usage (1) Assuming 90 days VLCC roundtrip and all additional crude is imported by sea Source: Drewry, Clarksons, US Census, BP Statistical Review 2015, Citibank. 16

17 Capacity Additions (mbpd) Million Barrels Navios Maritime Midstream Partners L.P. Chinese SPR Fill and Asian Refinery Expansion Accelerates VLCC Demand Chinese SPR capacity and fill development Filled Filling Capacity Under construction Planned Phase 1 Phase 2 Phase 3 China s projected SPR storage will be about 500 MB US SPR storage was 695 MB as of July 2015 According to IEA unreported crude stocks built by up to 116 mb over January to July 2015 including SPR and commercial storage fills 2016 SPR completion schedule would entail a fill rate of 260 kb/d for 2016 (VLCC cargo every 8 days) Refinery expansion in Asia and Middle East ,000 3,000 2,000 1,000 - Asia Pacific Total 4.5 mbpd (1) 197 4, , Source: Drewry, IEA Sep 2015 OMR, IEA MTOM Report Feb 2016, Clarksons (1) Total includes 0.3 mbpd OECD Asia and 0.1 mbpd Other Asia closures in 2016 Middle East Total 2.9 mbpd 17

18 VLCC Supply Fundamentals Deliveries 3M2016: 3.0 M dwt delivered, 5.2 M dwt projected (42% non-delivery by dwt) 2015: 6.2 M dwt delivered, 9.1 M dwt projected (31% nondelivery by dwt) 2014: 7.6 M dwt delivered, 10.2 M dwt projected (25% provisional non-delivery by dwt) 2013: 9.5 M dwt delivered, 17.8 M dwt projected (47% nondelivery by dwt) 2012: 15.3 M dwt delivered, 23.0 M dwt projected (33% non-delivery by dwt) 2011: 19.1 M dwt delivered, 29.1 M dwt projected (34% non-delivery by dwt) 2010: 16.6 M dwt delivered, 27.8 M dwt projected (40% non-delivery by dwt) Scrapping/Removals 3M2016: 0.0 million DWT 0.0% of fleet DWT 2015: 1.1 million DWT 0.6% of fleet DWT 2014: 3.6 million DWT 1.9% of fleet DWT 2013: 6.5 million DWT 3.5% of fleet DWT 2012: 4.8 million DWT 2.7% of fleet DWT 2011: 6.9 million DWT 4.2% of fleet DWT 2010: 12.4 million DWT 7.7% of fleet DWT Net Fleet Growth 2016: M dwt/ 3.0 M dwt or 1.5% (2) 2015: M dwt/ 6.0 M dwt or 3.1% (2) 2014: M dwt/ 4.0 M dwt or 2.1% 2013: M dwt/ 3.0 M dwt or 1.6% 2012: M dwt/10.6 M dwt or 6.0% 2011: M dwt/12.2 M dwt or 7.4% 2010: M dwt/ 4.2 M dwt or 2.6% 41.3 M DWT of the VLCC fleet or 20% of the entire fleet is 15+ years old Net fleet growth projections: For %; For % Source: Clarksons April 2016 m DWT % 6% 4% 2% 0% -2% -4% % Non-Deliveries Inflate VLCC Orderbook (1) % % % Actual Non-deliveries Jan 2015 Orderbook Jan 2016 Orderbook Actual % VLCC Net Fleet Growth (1) Total Orderbook as of beg Apr 2016= 39.3 million DWT (2) Includes 2 TMT VLOCs reclassed as VLCCs % Clarksons Projections

19 Company Highlights Visibility through Long- Term Charters with Strong Counterparties Pipeline & Cash Flow Growth Conservative Credit Ratios and Strong Asset Coverage Sponsor Provides Strategic Relationships and Scale & Seasoned Management Team Strong Tanker Market Environment Over $500.0 million in long-term contracted revenue with top-tier companies 100% fixed for 2016 and years average charter period with strong counterparties Upside potential through profit sharing ~ $1.7 million in Q Options for five VLCC vessels provide significant fleet and distribution growth Right to acquire from Navios Group any crude, product, LPG or chemical tanker with five+ year charter Actively surveying market for third party acquisitions Net Debt to Book Capitalization = 33.6% (Q1 2016) Navios Group has proven market access to debt and equity capital markets Sponsor has strategic relationships with customers, shipyards, banks and other key industry players Economies of scale provide operating expenses 8% lower than industry; fixed until November 2016 Management team has average industry experience of 20+ years per person Average VLCC earnings 2016 YTD = $57, % increase in average VLCC earnings 2015 over 2014 to $64,846 per day Increasing demand for seaborne transportation of crude oil (volume & distances) Healthy market encourages long-term employment fixtures Charterers prefer to deal with large, safe and reliable owners 19

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21 Appendix: Navios Midstream Fleet 21

22 Owned Fleet Vessel Type DWT Year Built Net Charter Rate ($/day) (1) Expiration Date (1) Profit Share Shinyo Ocean VLCC 281, ,400 38,400 01/ / % above $43,500 Shinyo Kannika VLCC 287, ,025 38,025 02/ / % above 44,000 Shinyo Saowalak VLCC 298, ,153 06/ % above $54,388 40% above $59,388 50% above $69,388 Shinyo Kieran VLCC 297, ,153 06/ % above $54,388 40% above $59,388 50% above $69,388 C. Dream VLCC 298, ,625 03/ % above $30,000 40% above $40,000 Nave Celeste VLCC 298, TOTAL 1,760,923 42,705 35,000 12/ /2018 (1) Table reflects backstop commitment from NNA at currently contracted rates for the Shinyo Kannika and the Shinyo Ocean and at $35,000 per day (net) for the Nave Celeste 22

23 Dropdown Options Vessel Type DWT Year Built Net Charter Rate ($/day) (1) Expiration Date (1) Profit Share Nave Galactic VLCC 297, Floating rate with floor $29,625/ $27,156 last 9 months 09/ ,000 02/2019 Nave Quasar VLCC 297, Floating Rate 03/ ,000 02/2019 Nave Buena Suerte VLCC 297, Nave Neutrino VLCC 298, Floating rate with $29,625 floor 43,480 37,500 08/ / /2017 Nave Electron VLCC 305, Floating rate 12/2017 TOTAL 1,495,500 Note: Dropdown options expire in November 2016 (1) Table reflects backstop commitment from NNA at $35,000 per day (net) for the Nave Quasar and the Nave Galactic 23

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