Navios South American Logistics Inc. Company Presentation November 2012
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 Navios South American Logistics, Inc. s ( Navios Logistics, NSAL, or the Company ) growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as 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 revenues and time charters. Although the Company believes that the expectations reflected in such forwardlooking 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 the Company. 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 changes in the demand for barge, pushboat and product tanker vessels; competitive factors in the market in which the Company operates; weatherrelated risks; risks associated with operations outside the United States; and other factors listed from time to time in the Company s filings with the Securities and Exchange Commission. The Company 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 the Company s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. For the selected financial data presented herein, Navios Logistics compiled consolidated statements of operation and selected balance sheets for the relevant periods. EBITDA represents Net Income/(Loss) attributable to Navios Logistics stockholders before interest, taxes, depreciation and amortization. EBITDA is presented because it is used by certain investors to measure a company's operating performance. 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 performance, the definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation. 2
Navios Logistics Overview 3
Creating Shareholder Value: Navios Group Navios Maritime Holdings Inc. (NYSE: NM) Controls 49-vessel drybulk fleet; 30 owned and 19 long term chartered-in vessels Flexible business model; Opportunity from market intelligence Stable cash flow from charter-out contracts >12 months and Short-Term Charters, COAs and FFAs FY 2011 EBITDA: $265.4 million NM: Share price 1 : $3.56 25.2% NM Ownership $2.10 / share 54.0% NM Economic Interest $0.66 / share 63.8% NM Ownership Navios Maritime Partners L.P. (NYSE: NMM) Focused on long-term charter business in the drybulk sector MLP with high dividend payout model Fleet of 21 dry bulk vessels of 2.3 M DWT NM receives incentive distributions through the wholly owned GP FY 2011 EBITDA: $137.8 million Market value of NM ownership 1 : $214.6 million Navios Maritime Acquisition Corp. (NYSE: NNA) Navios entity in tanker sector Fleet of 29 vessels: 7 VLCC, 20 product tankers, 2 chemical tankers Acquired product tankers for historically low values Developing leading company in tanker sector Market value of NM ownership 1 : $67.6 million Navios South American Logistics Integrated wet and dry logistics operator in Hidrovia Region Core operations: - Port Terminal facilities with storage - Barging (wet and dry) - Cabotage business Expansion into mineral commodities FY 2011 EBITDA: $39.0 million 1 As of November 19, 2012 4
Navios Logistics Ownership Structure Navios Maritime Holdings Inc. NYSE: NM Grandall Investments S.A. 63.8% Ownership 36.2% Ownership Navios South American Logistics Inc (Marshall Islands) Port Terminal Operations Storage and Transfer Bulk Terminal Nueva Palmira Uruguay (tax free zone) with 460,000 mt dry storage capacity Fuel Terminal San Antonio Port Paraguay with 45,700 m 3 storage capacity Barge Business 289 barges and pushboats transporting dry and liquid cargoes across the river system Pushboats Dry barges Oil barges LPG barges 1 floating dry dock Cabotage Business Refined product transportation along the Argentinean coast Six ocean going product tankers and two self-propelled barges Strategy to secure cash flows with long term contracts Awarded Brazilian Cabotage contracts for six new vessels 5
Navios Logistics Highlights Leading Logistics Provider in South America Multiple Avenues of Growth Favorable Market Fundamental Scale and Strong Asset Base Provide Operating Efficiency Strong Counterparties Focus on Contracted Cash Flow Seasoned Management Team with Strong Track Record and Established Brand Largest independent dry terminal in Hidrovia One of the largest independent liquid terminals in Paraguay One of the largest, most versatile barge river fleets serving a diverse set of industries Largest Argentinean product cabotage fleet with an average age of 3 years Opportunities to invest in new port infrastructure Increasing minerals and grain production and fuel demand create need for new convoys Opportunity to expand in Brazilian cabotage Robust growth in exports of grain and mineral commodities Hidrovia system and coastal cabotage are critical infrastructure for region Economies of scale provide low costs per ton transported Integrated terminal, barge and cabotage network offers substantial operating leverage Diverse group of large, high-quality counterparties Exposure to ADM, Bunge, Cargill, Dreyfus, Petrobras, Petropar, Vale, Vitol among others Strategic positioning with fixed rate contracts and CoA s with minimum volume guarantees Long-term relationships with high contract renewal rates Strategic relationships Experienced management team Long operating history in region 6
Integrated Transportation and Storage Services Port Terminals Barge Business Cabotage Business Asset Base Bulk transfer and storage port terminal in Nueva Palmira, Uruguay Liquid port in San Antonio, Paraguay 223 dry barges 39 tank barges 1 22 pushboats 2 small inland oil tankers 3 LPG barges 1 floating dry dock 6 Product tankers (8,974 17,508 dwt) 2 self-propelled barges Commodities Transported or Stored Dry cargo (cereals, soybeans, iron ore, etc) Liquid cargo (primarily diesel fuel and naphtha) Dry cargo Liquid cargo Liquefied Petroleum Gas (LPG) Refined oil products Typical Customer Contracts Long-term storage and transshipment contracts Time charters and CoAs (1-5 years) Spot market contracts Time charters (2-3 years average duration) Spot market contracts Geographic Region Strategic locations along the Hidrovia river system Hidrovia river system Argentinean coastal trade Opportunity to expand into Brazilian cabotage market 1 Including three tank barges to be delivered gradually until June 30, 2013 7
Largest Independent Logistics Provider in Hidrovia Ports Barge Business Cabotage # Barges & Pushboats 800 Top 5 Players DWT ( 000) Top 5 Argentinean Coastal Cabotage Players by Tonnage 1 700 684 Largest Independent Dry Port in the Hidrovia 600 500 400 300 289 247 200 181 118 100 One of the Largest Independent Liquid Ports in Paraguay 0 Ultrapetrol NSAL Fluvialba ADM Interbarge Key Benefits of Large Scale 1. Includes vessels 5,000 29,000 DWT Sources: Drewry as of January 2012, Companies websites Lower operating costs Greater market presence Higher quality charterers Strong strategic relationships (shipyards, commercial banks, etc.) 8
Presence Throughout Supply Chain CHILE BOLIVIA PARAGUAY Corumba Iron Ore 2 BRAZIL Port: Paraguay Fuel Terminal Grain / Crop Loading / unloading Storage 1 Barge Transportation 289 barges and pushboats Wet and liquid cargos URUGUAY 2 Port: Uruguay Bulk Terminal Storage Drying & conditioning facilities ARGENTINA Refineries 3 Exports Cabotage Transportation Dry Ports Wet Ports Refineries Southern Argentina 6 ocean going tankers 2 self-propelled barges 9
The Economics of River Transportation Barge transport is cost-effective One Barge: 1,500 Ton 52,500 Bushels 453,600 Gallons One 15 Barge Convoy: 22,500 Ton 787,500 Bushels 6,804,000 Gallons Jumbo Hopper Car: 112 Ton 4,000 Bushels 33,870 Gallons 100 Car Train Unit: 11,200 Ton 400,000 Bushels 3,870,000 Gallons Large Semi: 26 Ton 910 Bushels 7,865 Gallons One Barge Equivalent Units 13.4 Jumbo Hopper Cars 58 Large Semis (Trucks) = = One 15 Barge Convoy 2.0 100 Car-unit Train 870 Large Semis (Trucks) = = Source: IOWA Department of Transportation 10
Market Overview 11
Hidrovia: Agricultural Heartland of South America Runs over 4,500 kilometers across the agricultural heartland of South America Comparable in length to the Mississippi system South America Hidrovia Region Mississippi Region Number of barges: ~ 1,700 Number of barges: ~ 27,000 Source: Drewry as of January 2012 Significant Capacity for Growth 12
Attractive Underlying Latin American Market Solid macro economic fundamentals Robust economic growth 3.6% 2.2% 0.2% Latin America U.S. EU Avg. 12E-13E and decreasing long-term inflation 25 20 15 10 5 0 Inflation rate, average consumer prices (Annual percent change) High-growth, stable environment Increasing discretionary income across the region Room for future growth supported by demand from China Stable and rapidly improving political and economic environment Decreasing political risk (1) 1200 1000 800 600 400 200 0 and improving credit profiles Latin America Ranking S&P Rating Chile A+ Mexico BBB Brazil BBB Peru BBB Colombia BBB- Uruguay BBB- Paraguay BB- Argentina B Stable and democratic governments Tightening sovereign spreads, lower debt levels and political stability Investment grade credits Investment grade countries Global commodity boom is a driver of Latin America growth Regional Grain & Soybean Exports (2) (Million Tons) 78.5 91.5 95.7 101.5 122.6 127.7 132 136.8 148.7 104.9 112.3 Hidrovia regional iron ore production (Million Tons) 1.1 1.6 1.8 1.9 2.3 4.2 4.4 4.6 3.5 6.0 7.1 Commodity boom fueled by exports of grains, iron ore, forestry and hydrocarbons The Parana Hidrovia provides a 2,800 mile trade channel to the rest of the world Source: EIU, SBI, Bloomberg, Food and Agricultural Organization, Drewry as of January 2012, USDA Foreign Agricultural Service (1) Composite of Latin American spreads over 10-year U.S. Treasuries (2) Includes Argentina, Bolivia, Brazil, Paraguay and Uruguay 13
Fresh Water Availability vs. Population: Grain Exports = Virtual Water Trade Water requirement equivalent of main food products North & Central America Europe Asia Product Unit Equivalent water in m3 per unit 15% 8% South America 26% 6% 8% 13% Africa 11% 13% 36% % of Global Water Supply % of Global Population 60% Australia & Oceania 5% <1% Fresh beef kg 15 Fresh lamb kg 10 Fresh poultry kg 6 Cereals kg 1.5 Citrus fruits kg 1 Palm oil kg 2 Puls, roots and tubers kg 1 This table gives examples of water required per unit of major food products, including livestock, which consume the most water per unit. Cereals, oil crops, and pulses, roots and tubers consume far less water. Source: FAO, 1997a Global Virtual Water Imbalances Will Continue to be a Driver of Agricultural Trade Source: Web site of the UNESCO/IHP Regional Office of Latin America and the Caribbean 14
Favorable Market Fundamentals of Hidrovia VENEZUELA COLOMBIA ECUADOR Navios Oil Products Terminal PERU CHILE BOLIVIA ARGENTINA GUYANA SURINAME PARAGUAY URUGUAY Coastal Cabotage Trade FRENCH GUIANA BRAZIL Hidrovia River System Navios Dry Port Terminal Growing exports of grain and mineral commodities - Region accounts for ~50% of global soybean production - Significant expansion in iron ore production - Significant exporter to emerging market economies, such as China Reliance on waterborne transportation - Shortage of highway or rail infrastructure alternatives - River system provides access to Atlantic Ocean and global export markets - River barges and coastal tankers are the most cost-efficient method of transportation 15
Million Metric Tons Thousand Metric Tons Hidrovia Importance in World Dry Bulk Trade Hidrovia Region Soybean Production Corumba Brazil Iron Ore Production 160.0 60% 8,000 140.0 7,000 120.0 100.0 80.0 60.0 55% 50% Region % of World 6,000 5,000 4,000 3,000 40.0 45% 2,000 20.0 1,000 0.0 40% 0 Soybean Production Region % of World Iron Ore Corumba Production Hidrovia accounts for ~50% of world soybean production Increased Chinese demand driving Brazilian iron ore production growth Note: Crop years for Soybean Production according to USDA definition, P = Preliminary, E = Estimate Source: Drewry as of January 2012, USDA October 2012, Vale, MMX 16
Hidrovia Region: Stable Growth in Oil Demand 2000-2011 (thousand barrels per day) Total 2,794 2,785 2,679 2,615 2,709 2,806 2,953 3,073 3,154 3,166 3,328 3,412 CAGR 2000-2011 Argentina 2.6% Bolivia 2.4% Brazil 1.7% Paraguay 0.6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Argentina Bolivia Brazil Paraguay Uruguay Uruguay 1.6% Total 1.8% Argentina s total oil demand was about 678,000 bpd in 2011 Argentina s total oil refining capacity is about 627,000 bpd 69% of Argentina s refining capacity is located near the Hidrovia and in the Plate River Estuary Paraguay does not produce any crude oil and relies on imports from larger refineries in Argentina Source: Drewry as of January 2012, US EIA as of September 2012 17
Q3 2012 Earnings Highlights 18
Navios Logistics Q3 2012 Earnings Highlights (in $ 000) Three months ended Sept 30, 2012 Three months ended Sept 30, 2011 Y-O-Y Variance Nine months ended Sept 30, 2012 Nine months ended Sept 30, 2011 Y-O-Y Variance Navios Logistics Revenue 65,005 68,847 (6%) 188,445 167,908 12% EBITDA 13,156 8,909 48% 37,247 28,950 29% Net income/(loss) 896 (1,527) N/A 904 983 (8%) Port Terminals Revenue 25,614 31,300 (18%) 75,537 62,483 21% EBITDA 6,878 4,154 66% 18,591 11,506 62% Barge Business Revenue 24,211 23,170 4% 71,609 64,962 10% EBITDA 3,975 631 530% 9,527 5,013 90% Cabotage Business Revenue 15,180 14,377 6% 41,299 40,463 2% EBITDA 2,303 4,124 (44%) 9,129 12,431 (27%) 19
Navios Logistics Q3 2012 Balance Sheet Selected Balance Sheet Data (in $'000) Nine Months Ended September 30, 2012 Year Ended December 31, 2011 Cash & cash equivalents 59,633 40,529 Accounts Receivable 17,884 31,959 Vessels port terminal and other fixed assets, net 355,586 350,088 Total Assets 633,597 621,234 Senior notes 200,000 200,000 Current portion of long term debt 69 69 Long term debt, net of current portion 544 599 Current portion of capital lease obligations 1,342 31,221 Capital lease obligations, net of current portion 24,106 0 Noncontrolling Interest 577 541 Stockholders Equity (1) 321,588 320,684 Book Capitalization (1) 547,649 552,573 Net Debt / Book Capitalization 30% 35% (1) Excludes noncontrolling interest 20
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