SOURCE: Navios Maritime Partners L.P.

Navios Maritime Partners L.P.

November 03, 2015 07:32 ET

Navios Maritime Partners L.P. Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2015

MONACO--(Marketwired - Nov 3, 2015) - Navios Maritime Partners L.P. (NYSE: NMM)

  • Net Income: $11.8 million in Q3; $34.0 million for the nine months
  • Earnings per Common Unit: $0.13 in Q3; $0.38 for the nine months
  • EBITDA: $40.9 million in Q3; $117.5 million for the nine months
  • Operating Surplus: $30.4 million in Q3; $87.6 million for the nine months
  • Quarterly Distribution: $0.2125 Per Unit
  • Distribution Coverage: 1.69x for Q3

Navios Maritime Partners L.P. ("Navios Partners" or the "Company") (NYSE: NMM), an international owner and operator of container and dry bulk vessels, today reported its financial results for the third quarter and nine months ended September 30, 2015 and announced that it declared a quarterly cash distribution per common unit of $0.2125 ($0.85 annualized) payable on November 13, 2015, to unitholders of record as of November 12, 2015.

Since the last quarterly report a number of developments have affected the factors underlying Navios Partners' distributions, including significant uncertainty relating to global trade, with deepening uncertainty about prices of most seaborne commodities and continued questions relating to the outlook on seaborne volumes and ton miles. The Board of Directors ("Board") views these factors as indicating demand concerns and thus approaches the current environment cautiously, particularly when coupled with the continued digestion of the oversupply of dry bulk vessels and a difficult financing market.

Because of the changes that have taken place since last quarter's report, and after an extensive review of our fleet and market conditions, the Board has decided to reset the annual distribution to $0.85 per unit.

Some of the factors considered in calibrating the distribution to the current environment were:

  • Protecting Navios Partners' stakeholders and generating value in the long term for unitholders
  • Prolonged weak dry bulk industry fundamentals and outlook
  • Estimated cash flow from long-term charters on Navios Partners container fleet and certain dry bulk vessels
  • Adding flexibility and strength to the balance sheet during a difficult market
  • Opportunity for redeploying cash accretively in a fleet renewal program (particularly in the container sector), or otherwise
  • Inability to grow as access to capital markets was made difficult due to distribution yield
  • Yields for peer group in a normalized environment 

Dividend History

Navios Partners went public in November of 2007. Since that time, the Company's business model consistently returned capital to unitholders, without cessation or reduction. In total, any unitholder who purchased common units on the IPO date would have received a total of $13.115 per unit in distributions, including the distribution to be paid in November 2015.

Distribution Coverage

In setting the revised distribution, the Board considered, among other things, the existing dry bulk and container market environment, the uncertainty about the outlook and demand drivers supporting these markets and the estimated cash flow from our existing fleet. It was determined that Navios Partners should have the ability to sustain the revised distribution for a five-year period. Given the uncertainties of the market, no assurance can be provided that the estimates will be realized or that this distribution will be capable of being sustained during such five-year period.

Sponsor - Navios Maritime Holdings Inc.

  • Common Units Ownership Interest

Navios Holdings owns common units representing 18.1% of Navios Partners. As a result of the dividend reset, the sponsor will forgo approximately $14.1 million in annual distributions.

  • Incentive Distribution Right

As a result of the reset of the distribution, the General Partner will forgo approximately $3.9 million consisting of (1) reduction in the General Partner's pro rata share of total distribution and (2) foregone Incentive Distribution Rights.

Long-Term and Insured Cash Flow

Navios Partners has entered into medium to long-term time charter-out agreements for its vessels with a remaining average term of 3.0 years, which are expected to provide a stable base of revenue and distributable cash flow. Navios Partners has currently contracted out 99.4% of its available days for 2015, 63.7% for 2016 and 45.6% for 2017, expecting to generate revenues of approximately $234.1 million, $193.9 million and $167.5 million, respectively. The average expected daily charter-out rate for the fleet is $20,799, $26,829 and $32,427 for 2015, 2016 and 2017, respectively.

Navios Partners has insurance on certain long-term charter-out contracts of drybulk vessels for credit default occurring until the end of 2016, through an agreement with Navios Maritime Holdings Inc., up to a maximum cash payment of $20.0 million.

EARNINGS HIGHLIGHTS

For the following results and the selected financial data presented herein, Navios Partners has compiled consolidated statements of income for the three and nine months ended September 30, 2015 and 2014. The quarterly 2015 and 2014 information was derived from the unaudited condensed consolidated financial statements for the respective periods. Adjusted EBITDA, Adjusted Earnings per Common unit, Adjusted Net income and Operating Surplus are non-GAAP financial measures and should not be used in isolation or substitution for Navios Partners' results.

                       
                       
    Three Month   Three Month   Nine Month   Nine Month
    Period ended   Period ended   Period ended   Period ended
(in $'000 except per unit data)   September 30,
2015
  September 30,
2014
  September 30,
2015
  September 30,
2014
(unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenue   $ 57,103 (1)   $ 55,290   $ 170,362 (2)   $ 167,966  
Net Income   $ 11,764 (1)   $ 13,042   $ 33,998 (2)   $ 61,388  
Adjusted Net Income   $ 11,764 (1)   $ 13,042   $ 33,998 (2)   $ 35,833 (3) (4)
EBITDA   $ 40,872 (1)   $ 37,472   $ 117,547 (2)   $ 160,675  
Adjusted EBITDA   $ 40,872 (1)   $ 37,472   $ 117,547 (2)   $ 113,110 (3)
Earnings per Common Unit (basic and diluted)   $ 0.13 (1)   $ 0.16   $ 0.38 (2)   $ 0.77  
Adjusted Earnings per Common Unit (basic and diluted)   $ 0.13 (1)   $ 0.16   $ 0.38 (2)   $ 0.44 (3) (4)
Operating Surplus   $ 30,431 (1)   $ 25,003   $ 87,557 (2)   $ 123,770  
Maintenance and Replacement Capital Expenditure reserve   $ 3,516     $ 5,978   $ 10,190     $ 17,794  
                               
(1) Negatively affected by approximately $2.8 million revenue lost due to drydocks performed in advance.
(2) Negatively affected by approximately $5.6 million revenue lost due to drydocks performed in advance.
(3) Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per Common Unit do not include the accounting effect of the $47.6 million income from the insurance settlement.
(4) Adjusted Net Income and Adjusted Earnings per Common Unit do not include the $22.0 million loss from the non-cash accelerated amortization of the intangible asset relating to one Capesize vessel.
 
 

Three month periods ended September 30, 2015 and 2014

Time charter and voyage revenues for the three month period ended September 30, 2015 increased by $1.8 million or 3.3% to $57.1 million, as compared to $55.3 million for the same period in 2014. The increase was mainly attributable to: (i) the increase in revenue following the delivery of the YM Utmost and the YM Unity in the second half of 2014 and the delivery of the MSC Cristina in April 2015; (ii) the increase in time charter equivalent ("TCE") to $20,305 for the three month period ended September 30, 2015, from $20,009 for the three month period ended September 30, 2014; and (iii) the increase in available days of the fleet to 2,768 days for the three month period ended September 30, 2015, as compared to 2,709 days for the three month period ended September 30, 2014, mainly due to increased fleet, mitigated by approximately 84 drydock days during the third quarter of 2015 and the redelivery of the Navios Aldebaran and the Navios Prosperity in the first quarter of 2015.

EBITDA increased by $3.4 million to $40.9 million for the three month period ended September 30, 2015, as compared to $37.5 million for the same period in 2014. The increase in EBITDA was primarily due to: (i) a $1.8 million increase in revenue; (ii) a $2.7 million decrease in time charter and voyage expenses; and (iii) a $1.1 million increase in other income. The above increase was partially mitigated by a $1.9 million increase in management fees due to the increased number of vessels, a $0.1 million increase in general and administrative expenses and a $0.2 million increase in other expenses.

The reserve for estimated maintenance and replacement capital expenditures for the three month periods ended September 30, 2015 and 2014 was $3.5 million and $6.0 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Navios Partners generated an Operating Surplus for the three month period ended September 30, 2015 of $30.4 million, as compared to $25.0 million for the three month period ended September 30, 2014. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership's ability to make quarterly cash distributions (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Net income for the three months ended September 30, 2015 amounted to $11.8 million compared to $13.0 million for the three months ended September 30, 2014. The decrease in net income by $1.3 million was due to: (i) a $2.7 million increase in depreciation and amortization expense mainly due to the increased fleet size; (ii) a $0.9 million increase in interest expense and finance cost, net; and (iii) a $1.1 million increase in direct vessel expenses. The above decrease was partially mitigated by an increase in EBITDA by $3.4 million.

Nine month periods ended September 30, 2015 and 2014

Time charter and voyage revenues for the nine month period ended September 30, 2015 increased by $2.4 million or 1.4% to $170.4 million, as compared to $168.0 million for the same period in 2014. The increase was mainly attributable to: (i) the increase in revenue following the delivery of the Navios La Paix and the Navios Sun in January 2014, the YM Utmost and the YM Unity in the second half of 2014 and the delivery of the MSC Cristina in April 2015; (ii) the increase in TCE to $20,267 for the nine month period ended September 30, 2015, from $20,277 for the nine month period ended September 30, 2014. As a result of the vessel acquisitions, available days of the fleet increased to 8,199 days for the nine month period ended September 30, 2015, as compared to 8,072 days for the same period in 2014.

EBITDA for the first nine months of 2014 was positively affected by the accounting effect of $47.6 million income from the insurance settlement. Excluding this item, Adjusted EBITDA increased by $4.4 million to $117.5 million for the nine month period ended September 30, 2015, as compared to $113.1 million for the same period in 2014. The increase in Adjusted EBITDA was due to: (i) a $2.4 million increase in revenue; (ii) a $5.8 million decrease in time charter and voyage expenses; (iii) a $1.2 million increase in other income; and (iv) a $0.2 million decrease in other expenses. The above increase was partially mitigated by a $5.2 million increase in management fees due to the increased number of vessels.

The reserve for estimated maintenance and replacement capital expenditures for the nine month periods ended September 30, 2015 and 2014 was $10.2 million and $17.8 million, respectively (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Navios Partners generated an Operating Surplus for the nine month period ended September 30, 2015 of $87.6 million, as compared to $123.8 million for the nine month period ended September 30, 2014. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership's ability to make quarterly cash distributions (please see Reconciliation of Non-GAAP Financial Measures in Exhibit 3).

Net income for the first nine months of 2014 was: (i) positively affected by the accounting effect of $47.6 million income from the insurance settlement; and (ii) negatively impacted by a $22.0 million loss from the non-cash accelerated amortization of an intangible asset relating to one Capesize vessel. Excluding these items, Adjusted Net income for the nine months ended September 30, 2015 amounted to $34.0 million compared to $35.8 million for the nine months ended September 30, 2014. The decrease in Adjusted Net income by $1.8 million was due to a $2.8 million increase in interest expense and finance cost, net, a $2.2 million increase in direct vessel expenses and a $1.1 million increase in depreciation and amortization expense. The above decrease was partially mitigated by a $4.4 million increase in Adjusted EBITDA.

Fleet Employment Profile

The following table reflects certain key indicators of Navios Partners' core fleet performance for the three and nine month periods ended September 30, 2015 and 2014.

                         
    Three Month
 Period ended
 September 30,
 2015
 ($ '000)
 (unaudited)
    Three Month
 Period ended
September 30,
 2014
 ($ '000)
 (unaudited)
    Nine Month
 Period ended
September 30,
 2015
 ($ '000)
 (unaudited)
    Nine Month
 Period ended
 September 30,
 2014
 ($ '000)
 (unaudited)
 
Available Days(1)     2,768       2,709       8,199       8,072  
Operating Days(2)     2,762       2,702       8,190       8,061  
Fleet Utilization(3)     99.8 %     99.8 %     99.9 %     99.9 %
Time Charter Equivalent (per day)   $ 20,305     $ 20,009     $ 20,267     $ 20,277  
Vessels operating at period end     31       31       31       31  
                                 
(1) Available days for the fleet represent total calendar days the vessels were in Navios Partners' possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues.
   
(2) Operating days is the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.
   
(3) Fleet utilization is the percentage of time that Navios Partners' vessels were available for revenue generating available days, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, drydockings or special surveys.
   
(4) TCE rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet.
   
   

Conference Call details:

Navios Partners' management will host a conference call today, Tuesday, November 3, 2015 to discuss the results for the third quarter and nine months ended September 30, 2015.

Call Date/Time: Tuesday, November 3, 2015 at 8:30 am ET
Call Title: Navios Partners Q3 2015 Financial Results Conference Call
US Dial In: +1.866.394.0817
International Dial In: +1.706.679.9759
Conference ID: 5665 6629

The conference call replay will be available two hours after the live call and remain available for one week at the following numbers:

US Replay Dial In: +1.800.585.8367
International Replay Dial In: +1.404.537.3406
Conference ID: 5665 6629

Slides and audio webcast:

There will also be a live webcast of the conference call, through the Navios Partners website (www.navios-mlp.com) under "Investors". Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

A supplemental slide presentation will be available on the Navios Partners' website under the "Investors" section by 8:00 am ET on the day of the call.

About Navios Maritime Partners L.P.

Navios Partners (NYSE: NMM) is a publicly traded master limited partnership which owns and operates container and dry cargo vessels. For more information, please visit our website at www.navios-mlp.com

Forward-Looking Statements

This press release 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 including Navios Partners' future distributions and its ability to sustain the revised distribution, opportunities to reinvest cash accretively in a fleet renewal program or otherwise and Navios Partners' 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 Partners at the time this presentation was made. Although Navios Partners 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 Partners. 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, uncertainty relating to global trade, including prices of seaborne commodities and continuing issues related to seaborne volume and ton miles, our continued ability to enter into long-term time charters, our ability to maximize the use of our vessels, expected demand in the dry cargo shipping sector in general and the demand for our Panamax, Capesize, Ultra-Handymax and Container vessels in particular, fluctuations in charter rates for dry cargo carriers and container vessels, the aging of our fleet and resultant increases in operations costs, the loss of any customer or charter or vessel, changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors, 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, general domestic and international political conditions, competitive factors in the market in which Navios Partners operates; risks associated with operations outside the United States; and other factors listed from time to time in Navios Partners' filings with the Securities and Exchange Commission, including its Form 20-F's and Form 6-K's. Navios Partners 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 Partners' expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Partners makes no prediction or statement about the performance of its common units.

 
EXHIBIT 1
 
NAVIOS MARITIME PARTNERS L.P.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. Dollars except unit data)
         
    September 30,
2015
(unaudited)
  December 31,
2014
(unaudited)
ASSETS            
Current assets            
Cash and cash equivalents   $ 25,141   $ 99,495
Restricted cash     7,795     954
Accounts receivable, net     12,652     13,278
Prepaid expenses and other current assets     721     1,470
Total current assets     46,309     115,197
             
             
Vessels, net     1,244,740     1,139,426
Deposits for vessels acquisitions     --     10
Deferred dry dock and special survey costs, net and other long term assets     22,797     8,750
Investment in affiliates     1,266     521
Loans receivable from affiliates     1,446     750
Intangible assets     59,453     74,055
Total non-current assets     1,329,702     1,223,512
Total assets   $ 1,376,011   $ 1,338,709
             
             
LIABILITIES AND PARTNERS' CAPITAL            
Current liabilities            
Accounts payable   $ 2,591   $ 3,824
Accrued expenses     2,235     3,623
Deferred voyage revenue     3,654     4,310
Current portion of long-term debt, net     20,902     16,435
Amounts due to related parties     21,816     1,880
Total current liabilities     51,198     30,072
             
Long-term debt, net     582,390     559,539
Total non-current liabilities     582,390     559,539
Total liabilities     633,588     589,611
             
             
Commitments and contingencies     --     --
Partners' capital:            
Common Unitholders (83,079,710 and 77,359,163 units issued and outstanding at September 30, 2015 and December 31, 2014, respectively)     737,478     744,075
General Partner (1,695,509 and 1,578,763 units issued and outstanding at September 30, 2015 and December 31, 2014, respectively)     4,945     5,023
Total partners' capital     742,423     749,098
Total liabilities and partners' capital   $ 1,376,011   $ 1,338,709
             
 
 
NAVIOS MARITIME PARTNERS L.P.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Expressed in thousands of U.S. Dollars except unit and per unit amounts)
                         
    Three Month
Period Ended
September 30,
2015
(unaudited)
    Three Month
Period Ended
September 30,
2014
(unaudited)
    Nine Month
Period Ended
September 30,
 2015
(unaudited)
    Nine Month
Period Ended
September 30,
 2014
(unaudited)
 
Time charter and voyage revenues   $ 57,103     $ 55,290     $ 170,362     $ 167,966  
Time charter and voyage expenses     (908 )     (3,607 )     (5,856 )     (11,690 )
Direct vessel expenses     (1,278 )     (227 )     (2,572 )     (373 )
Management fees     (14,481 )     (12,611 )     (42,023 )     (36,855 )
General and administrative expenses     (1,900 )     (1,778 )     (5,724 )     (5,751 )
Depreciation and amortization     (19,983 )     (17,267 )     (57,127 )     (77,954 )
Interest expense and finance cost, net     (7,901 )     (7,046 )     (24,003 )     (21,160 )
Interest income     54       110       153       200  
Other income     1,303       178       1,703       48,090  
Other expense     (245 )     --       (915 )     (1,085 )
Net income   $ 11,764     $ 13,042     $ 33,998     $ 61,388  
                                 
Earnings per unit:    
    Three Month
Period Ended
September 30, 2015
(unaudited)
  Three Month
Period Ended
September 30, 2014
(unaudited)
  Nine Month
Period Ended
September 30, 2015
(unaudited)
  Nine Month
Period Ended
September 30, 2014
(unaudited)
Earnings per unit:                        
Common unit (basic and diluted)   $ 0.13   $ 0.16   $ 0.38   $ 0.77
                         
                         
   
   
NAVIOS MARITIME PARTNERS L.P.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Expressed in thousands of U.S. Dollars)  
             
    Nine Month
Period Ended
September 30,
2015
(unaudited)
    Nine Month
Period Ended
September 30,
2014
(unaudited)
 
OPERATING ACTIVITIES                
Net income   $ 33,998     $ 61,388  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     57,127       77,954  
Amortization and write-off of deferred financing cost     2,941       2,270  
Amortization of deferred dry dock and special survey costs     2,572       373  
Changes in operating assets and liabilities:                
Net decrease in restricted cash     --       2  
Decrease in accounts receivable     626       7,973  
Decrease in prepaid expenses and other current assets     749       1,331  
Decrease in other long term assets     16       1  
Payments for dry dock and special survey costs     (16,635 )     (6,406 )
Decrease in accounts payable     (1,233 )     (634 )
Decrease in accrued expenses     (1,388 )     (935 )
(Decrease)/increase in deferred voyage revenue     (656 )     210  
Increase in amounts due to related parties     19,936       5,027  
Net cash provided by operating activities     98,053       148,554  
                 
INVESTING ACTIVITIES:                
Acquisition of vessels     (147,830 )     (96,425 )
Deposits for acquisition of vessels     --       (5,905 )
Investment in affiliates     (745 )     --  
Loans receivable from affiliates     (696 )     (338 )
Release of restricted cash for vessel acquisitions     --       33,429  
Net cash used in investing activities     (149,271 )     (69,239 )
                 
FINANCING ACTIVITIES:                
                 
Cash distributions paid     (114,291 )     (103,521 )
Net proceeds from issuance of general partner units     1,528       2,233  
Proceeds from issuance of common units, net of offering costs     72,090       104,499  
Proceeds from long term debt     79,819       28,000  
Net increase in restricted cash     (6,841 )     --  
Repayment of long-term debt and payment of principal     (54,695 )     (4,780 )
Debt issuance costs     (746 )     (878 )
Net cash (used in)/provided by financing activities     (23,136 )     25,553  
(Decrease)/increase in cash and cash equivalents     (74,354 )     104,868  
Cash and cash equivalents, beginning of period     99,495       35,346  
Cash and cash equivalents, end of period   $ 25,141     $ 140,214  
                 
                 
                 
EXHIBIT 2
             
Owned Vessels   Type   Built   Capacity
 (DWT)
Navios Apollon   Ultra-Handymax   2000   52,073
Navios Soleil   Ultra-Handymax   2009   57,337
Navios La Paix   Ultra-Handymax   2014   61,485
Navios Gemini S   Panamax   1994   68,636
Navios Libra II   Panamax   1995   70,136
Navios Felicity   Panamax   1997   73,867
Navios Galaxy I   Panamax   2001   74,195
Navios Hyperion   Panamax   2004   75,707
Navios Alegria   Panamax   2004   76,466
Navios Orbiter   Panamax   2004   76,602
Navios Helios   Panamax   2005   77,075
Navios Hope   Panamax   2005   75,397
Navios Sun   Panamax   2005   76,619
Navios Sagittarius   Panamax   2006   75,756
Navios Harmony   Panamax   2006   82,790
Navios Fantastiks   Capesize   2005   180,265
Navios Aurora II   Capesize   2009   169,031
Navios Pollux   Capesize   2009   180,727
Navios Fulvia   Capesize   2010   179,263
Navios Melodia   Capesize   2010   179,132
Navios Luz   Capesize   2010   179,144
Navios Buena Ventura   Capesize   2010   179,259
Navios Joy    Capesize   2013   181,389
             
             
Container Vessels    Type    Built   Capacity
TEU
Hyundai Hongkong   Container    2006   6,800
Hyundai Singapore   Container    2006   6,800
Hyundai Tokyo   Container    2006   6,800
Hyundai Shanghai   Container    2006   6,800
Hyundai Busan   Container    2006   6,800
YM Utmost   Container    2006   8,204
YM Unity   Container    2006   8,204
MSC Cristina   Container    2011   13,100
             
             
             
EXHIBIT 3

Disclosure of Non-GAAP Financial Measures

1. EBITDA and Adjusted EBITDA

EBITDA represents net income plus interest and finance costs plus depreciation and amortization and income taxes.

Adjusted EBITDA represents EBITDA excluding certain items, as described under "Earnings Highlights".

EBITDA and Adjusted EBITDA are presented because Navios Partners believes that EBITDA and Adjusted EBITDA are a basis upon which liquidity can be assessed and present useful information to investors regarding Navios Partners' ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. EBITDA and Adjusted EBITDA are "non-GAAP financial measures" 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 and Adjusted EBITDA are frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA and Adjusted EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation.

2. Operating Surplus

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 Partners' 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 accounting principles generally accepted in the United States 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.

3. Available Cash

Available Cash generally means for each fiscal quarter, all cash on hand at the end of the quarter:

  • less the amount of cash reserves established by the Board of Directors to:

    • provide for the proper conduct of Navios Partners' business (including reserve for maintenance and replacement capital expenditures);

    • comply with applicable law, any of Navios Partners' debt instruments, or other agreements; or

    • provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters;

  • plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.

Available Cash 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. Available cash is not required by accounting principles generally accepted in the United States 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.

4. Reconciliation of Non-GAAP Financial Measures

                         
    Three Month
 Period ended
 September 30,
 2015
 ($ '000)
(unaudited)
    Three Month
 Period ended
 September 30,
 2014
 ($ '000)
(unaudited)
    Nine Month
 Period ended
 September 30,
 2015
($ '000)
(unaudited)
    Nine Month
 Period ended
 September 30,
 2014
($ '000)
(unaudited)
 
Net cash provided by operating activities   $ 28,615     $ 32,157     $ 98,053     $ 148,554  
Net decrease/(increase) in operating assets     7,132       916       15,244       (2,901 )
Net decrease in operating liabilities     (1,930 )     (1,772 )     (16,659 )     (3,668 )
Net interest cost     7,847       6,936       23,850       20,960  
Amortization and write-off of deferred financing costs     (792 )     (765 )     (2,941 )     (2,270 )
EBITDA(1)   $ 40,872     $ 37,472     $ 117,547     $ 160,675  
Income from the insurance settlement     --       --       --       (47,565 )
Adjusted EBITDA   $ 40,872     $ 37,472     $ 117,547     $ 113,110  
Cash interest income     5       77       47       140  
Cash interest paid     (6,930 )     (6,568 )     (19,847 )     (19,251 )
Maintenance and replacement capital expenditures     (3,516 )     (5,978 )     (10,190 )     (17,794 )
Income from the insurance settlement     --       --       --       47,565  
Operating Surplus   $ 30,431     $ 25,003     $ 87,557     $ 123,770  
Cash distribution paid relating to the first half     --       --       (76,194 )     (70,948 )
Cash reserves     7,666       10,471       26,734       (17,348 )
Available cash for distribution   $ 38,097     $ 35,474     $ 38,097     $ 35,474  
                                 
(1)                        
                         
    Three Month
 Period ended
 September 30,
 2015
 ($ '000)
(unaudited)
    Three Month
 Period ended
 September 30,
 2014
 ($ '000)
(unaudited)
    Nine Month
 Period ended
 September 30,
 2015
 ($ '000)
(unaudited)
    Nine Month
Period ended
September 30,
2014
($ '000)
(unaudited)
 
Net cash provided by operating activities   $ 28,615     $ 32,157     $ 98,053     $ 148,554  
Net cash used in investing activities   $ (623 )   $ (65,511 )   $ (149,271 )   $ (69,239 )
Net cash (used in)/provided by financing activities   $ (29,692 )   $ (9,948 )   $ (23,136 )   $ 25,553  
                                 
                                 

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