Navios Maritime Partners L.P.(US:NMM)2025-03-28 21:00PART I Key Information This section outlines the principal risks affecting Navios Partners' business, categorized into industry-specific, indebtedness-related, organizational, and tax-related risks Risk Factors The company faces significant risks from the cyclical nature of the shipping industry, volatile charter rates, and dependence on global trade, especially with China, alongside regulatory, financial, and structural challenges - The international shipping industry is cyclical, leading to volatile charter hire rates. The Baltic Dry Index (BDI) fluctuated from a low of 530 in February 2023 to a high of 3,346 in December 2023, indicating significant market volatility40 - The company's growth is highly dependent on demand from China, which accounted for approximately 76% of global seaborne iron ore trade, 31% of seaborne coal movements, and 26% of global seaborne crude oil trade in 202453 - As of January 2024, vessels trading within the EU/EEA must comply with the EU Emissions Trading System (ETS), requiring the surrender of emission allowances for CO2 emissions, which could increase operational costs if not covered by charterers97 - The company is exposed to interest rate volatility, particularly SOFR, as loans are advanced at floating rates. A 1% increase in SOFR would have increased interest expense by $14.8 million for the year ended December 31, 2024178763 - Credit facilities contain restrictive covenants, including maintaining a minimum net worth of $135.0 million, a ratio of EBITDA to interest expense of at least 2.00:1.00, and limitations on the ratio of total liabilities to total assets184551 - There is a risk of being treated as a Passive Foreign Investment Company (PFIC) for U.S. tax purposes, which could have adverse tax consequences for U.S. unitholders. The company believes it was not a PFIC for the 2024 taxable year217218 Information on the Partnership Navios Partners is an international owner and operator of a diversified fleet of 174 vessels, focusing on sustainability and stable cash flows - As of March 20, 2025, Navios Partners' fleet consists of 69 dry bulk vessels, 49 containerships, and 56 tanker vessels, including 22 newbuildings expected for delivery through the first half of 2028280 - The company is committed to achieving net-zero carbon emissions by 2050 and has joined the Global Maritime Forum's Getting to Zero Coalition, investing in emission reduction technologies and installing Ballast Water Treatment Systems (BWTS) on 100% of its fleet265270 - The fleet has an average age of 9.8 years as of March 20, 2025, which is younger than industry averages for drybulk (12.6 years), containerships (13.9 years), and tankers (14.0 years)294 - For 2025, the company has fixed 99.3% of available containership days, 45.3% of available drybulk days (excluding index-linked), and 84.2% of available tanker days (excluding index-linked) to secure stable cash flows291 - For the year ended December 31, 2024, one customer accounted for 11.3% of total revenues. No single customer accounted for 10% or more of revenues in 2023 or 2022297765 History and Development of the Partnership Navios Partners, a Marshall Islands limited partnership formed in 2007, operates a diverse fleet with total borrowings of $2,153.2 million as of December 31, 2024 - Navios Partners was formed on August 7, 2007, under the laws of the Republic of the Marshall Islands254 - As of December 31, 2024, the company's total borrowings amounted to $2,153.2 million174 Business Overview The company operates a diversified fleet of dry cargo and tanker vessels, focusing on sustainability, stable cash flows, and active fleet management under extensive regulation Fleet Composition as of March 20, 2025 | Vessel Type | Count | | :--- | :--- | | Dry Bulk Vessels | 69 | | Containerships | 49 | | Tanker Vessels | 56 | | Total Fleet | 174 | - The company's business strategy includes strategically managing sector exposure, pursuing stable cash flows through long-term charters, actively managing the fleet to maximize return on capital, and maintaining a competitive cost structure through its relationship with the Manager296301 - The company is subject to extensive regulation, including MARPOL for pollution prevention, the BWM Convention for ballast water, SOLAS for safety, and the ISPS Code for security, also impacted by regional rules like the EU ETS and US regulations under OPA and the Clean Air Act330333344356361 Operating and Financial Review and Prospects This section analyzes Navios Partners' financial performance, liquidity, capital expenditures, and critical accounting estimates for fiscal year 2024 Operating Results For FY2024, revenues increased to $1,334.1 million due to higher TCE rates, but net income decreased to $367.3 million primarily due to lower 'Other income' Consolidated Revenue and Expense (FY2024 vs. FY2023) | (In thousands of U.S. dollars) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Time charter and voyage revenues | $ 1,334,066 | $ 1,306,889 | | Vessel operating expenses | $ (349,160) | $ (331,653) | | Depreciation and amortization | $ (228,472) | $ (217,823) | | Interest expense and finance cost, net | $ (124,529) | $ (133,642) | | Net income | $ 367,308 | $ 433,645 | Key Fleet Performance Indicators (FY2024 vs. FY2023) | Indicator | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Available Days | 54,261 | 54,766 | | Fleet Utilization | 98.9% | 99.1% | | TCE Rate (per day) | $ 22,924 | $ 22,337 | - Adjusted EBITDA decreased by $16.0 million to $731.6 million for FY2024, compared to $747.6 million for FY2023572 - The decrease in net income was mainly due to a $53.1 million decrease in 'Other income', as 2023 included compensation for early termination of charter parties for two containerships540572 Liquidity and Capital Resources Navios Partners maintained a positive working capital of $33.3 million as of December 31, 2024, with strong liquidity from operations and financing activities Cash Flow Summary (FY2024 vs. FY2023) | (In thousands of U.S. dollars) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 483,478 | $ 560,317 | | Net cash used in investing activities | $ (782,126) | $ (253,015) | | Net cash provided by/ (used in) financing activities | $ 349,262 | $ (233,225) | - As of December 31, 2024, total borrowings, net of deferred finance costs, were $2,128.9 million, an increase from $1,861.5 million at year-end 2023549577 - Capital expenditures totaled $1,007.1 million in FY2024, primarily for vessel acquisitions ($747.0 million) and deposits for newbuildings ($260.1 million)578580 - The company was in compliance with all financial covenants in its credit facilities as of December 31, 20245521110 Critical Accounting Estimates Critical accounting estimates involve significant judgment, particularly for impairment of long-lived assets and revenue recognition, impacting financial reporting - The company reviews its long-lived assets for impairment whenever events indicate the carrying amount may not be recoverable, comparing carrying value to undiscounted projected net operating cash flows594916 - The impairment analysis uses assumptions for future charter rates, utilizing a one-year historical average for the first year and a ten-year historical average for the remaining period, along with estimates for operating expenses, scrap values, and utilization598918 - In FY2024, an impairment loss of $17.1 million was recognized for four vessels as their undiscounted projected cash flows did not exceed their carrying value5991010 - Revenue from time charters is recognized on a straight-line basis as an operating lease, while revenue from voyage charters is recognized ratably from the port of loading to discharge602605931934 Directors, Senior Management and Employees This section details the company's leadership, compensation structure, and board practices, highlighting experienced management and independent committees - The senior management team includes Angeliki Frangou (Chairwoman & CEO), Ted C. Petrone (Vice Chairman), and Shunji Sasada (President), all with extensive experience in Navios and the shipping industry610613614615 - Officers are employees of the Manager, and Navios Partners reimburses the Manager for their services; for FY2024, reimbursement for administrative services was $63.8 million630 - In December 2024, the Compensation Committee approved a cash payment of $5.9 million to officers and directors, with an additional $5.9 million subject to service conditions in 2025633 - The Board of Directors consists of seven members: three appointed by the General Partner and four elected by common unitholders on a staggered basis638 - The company has an Audit Committee, a Conflicts Committee, and a Compensation Committee, each composed of independent directors640641642643 Major Unitholders and Related Party Transactions Key major unitholders include Angeliki Frangou and Pilgrim Global Advisors, with significant related party transactions through management agreements with the Manager Major Unitholders as of March 20, 2025 | Name of Beneficial Owner | Common Units Beneficially Owned | Percentage | | :--- | :--- | :--- | | Angeliki Frangou | 5,039,090 | 17.1% | | Pilgrim Global Advisors LLC | 4,908,105 | 16.6% | | Ned L. Sherwood | 2,157,445 | 7.3% | | George O. Sertl, Jr. | 1,510,013 | 5.1% | - In August 2024, Navios Partners renewed its Master Management Agreement and Administrative Services Agreement with the Manager for a ten-year term, commencing January 1, 20256636681172 - The new Master Management Agreement includes a technical management fee of $950/day per vessel, a commercial management fee of 1.25% on revenues, and an S&P fee of 1% on transactions663 - The Administrative Services Agreement provides for reimbursement of allocable general and administrative costs incurred by the Manager on behalf of the company6701180 Financial Information The company is not involved in material legal proceedings and maintains a quarterly cash distribution policy of $0.05 per unit, subject to board discretion - The company is not involved in any legal proceedings that are expected to have a material adverse effect on its business or financial position673 - The current distribution policy, amended in July 2020, is to pay a quarterly cash distribution of $0.05 per unit. The payment of distributions is at the discretion of the Board of Directors678 Quarterly Cash Distributions Declared in FY2024 | Quarter Ended | Amount per Unit | Total Amount (in thousands) | | :--- | :--- | :--- | | Dec 31, 2023 | $0.05 | $1,540 | | Mar 31, 2024 | $0.05 | $1,540 | | Jun 30, 2024 | $0.05 | $1,531 | | Sep 30, 2024 | $0.05 | $1,521 | Additional Information This section covers corporate and legal matters, including material contracts, exchange controls, and taxation, detailing U.S. federal income tax considerations and Greek tonnage tax - The company has numerous material contracts, including a Master Management Agreement and an Administrative Services Agreement with the Manager, and various credit facilities and sale-leaseback agreements for its vessels694695696 - The company is not aware of any governmental laws or exchange controls in the Marshall Islands that restrict the export of capital or remittance of dividends to non-resident holders701 - The company has elected to be treated as a corporation for U.S. federal income tax purposes and believes it qualifies for the Section 883 exemption, which exempts U.S. Source International Transportation Income from U.S. federal income tax480484485 - In Greece, foreign-flagged vessels managed from a Greek office are subject to a tonnage tax, which exhausts the tax liability on income from the exploitation of the vessel outside Greece2164981139 Quantitative and Qualitative Disclosures about Market Risks The company is exposed to foreign exchange, interest rate, credit, and inflation risks, with interest rate volatility and customer concentration being key concerns - The company's primary market risks are foreign exchange, interest rate, credit, and inflation760762764768 - A 1% increase in SOFR would have increased interest expense by $14.8 million for the year ended December 31, 2024763 - For FY2024, one customer accounted for 11.3% of total revenues, representing a concentration of credit risk765 PART II Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with an unqualified audit report - Management concluded that disclosure controls and procedures were effective as of December 31, 2024772 - Management's assessment, based on the COSO 2013 framework, concluded that internal control over financial reporting was effective as of December 31, 2024776 - The company's independent registered public accounting firm issued an unqualified audit report on the internal control over financial reporting778 Other Information This section covers governance, principal accountant fees, unit repurchase program, and cybersecurity risk management, with no material incidents reported - The Board of Directors has determined that Serafeim Kriempardis qualifies as an "audit committee financial expert"780 Principal Accountant Fees (FY2024) | Fee Type | Amount (in millions) | | :--- | :--- | | Audit Fees | $0.7 | | Tax Fees | $0.2 | | Total | $0.9 | - Under its $100.0 million unit repurchase program, Navios Partners repurchased 489,955 common units for approximately $25.0 million during 2024789790 - The company has a cybersecurity risk management program overseen by the board, and no material cybersecurity incidents were reported for the year ended December 31, 2024796799800 PART III Financial Statements This section presents the audited consolidated financial statements for FY2024, with an unqualified opinion from Ernst & Young, highlighting vessel recoverability as a critical audit matter - The financial statements were audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A., who issued an unqualified opinion816817 - The auditor identified the 'Recoverability assessment of vessels' as a Critical Audit Matter due to the significant judgment and estimation uncertainty involved in forecasting future charter rates for non-contracted revenue days821822 Consolidated Balance Sheet Highlights (as of Dec 31, 2024) | (In thousands of U.S. dollars) | Amount | | :--- | :--- | | Total Assets | $ 5,673,240 | | Total Liabilities | $ 2,566,612 | | Total Partners' Capital | $ 3,106,628 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2024) | (In thousands of U.S. dollars) | Amount | | :--- | :--- | | Time charter and voyage revenues | $ 1,334,066 | | Net income | $ 367,308 | | Earnings per common unit, basic | $ 11.98 | Exhibits This section lists all exhibits filed with the annual report, including partnership agreements, management contracts, and various financing agreements - Key exhibits include the Fourth Amended and Restated Agreement of Limited Partnership805 - Includes the Master Management Agreement and Administrative Services Agreement with Navios Shipmanagement Inc., effective January 1, 2025706810 - A comprehensive list of financing agreements, including numerous term loan facilities and bareboat charter/sale-leaseback agreements, are filed as exhibits806807808809810