Navios Maritime Partners - Earnings Call - Q3 2021

Transcript

Speaker 0

Thank you for joining us for Navios Maritime Partners Third Quarter twenty twenty one Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frango Chief Operating Officer, Mr. Stratos Desypris Chief Financial Officer, Ms. Arie Tusseroni and Executive Vice President of Business Development, Mr.

George Agniotis. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Maritime Partners website at www.naviosmlp.com. You'll see the webcasting link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there. Now I will review the Safe Harbor statement.

This conference call should contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward looking statements are statements that are not historical facts. Such forward looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which would cause actual results to differ materially from the forward looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks.

Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows. First, Ms. Fengu will offer opening remarks. Next, Mr.

Tessipri will give an overview of Navios Partners segment data. Next, Ms. Czeroni will give an overview of Navios Partners financial results. Then Mr. Acneotis will provide an operational update and an industry overview.

And lastly, we'll open the call to take questions. Now I turn the call over to Navios Partners' Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?

Speaker 1

Thank you, Daniela, and good morning to all of you joining us on today's call. I am pleased with the results for the third quarter of twenty twenty one. During Q3, Navios Partners recorded revenue of $228,000,000 adjusted EBITDA of $145,200,000 and net income of $162,100,000 Please turn to Slide four. On 10/15/2021, we completed our transformative merger with Navios Acquisition. Today, NMM is one of the largest U.

S. Publicly listed shipping companies with 15 vessel types diversified across three segments segments and servicing more than 10 end markets. About a third of our fleet operates in each of the dry bulk containerships and tiger segments. We believe that this combination offers a stronger, more resilient entity mitigating sector specific cyclicality. NMM has a solid balance sheet and a modest leverage, a healthy income statement and a pipeline of about $2,200,000,000 in contracted revenue.

Overall, our diversified platform should provide flexibility allowing us to capitalize on cross segment opportunities. We expect to be able to provide more predictable returns to our unitholders despite uneven sector performance. As shown on Slide five, 2021 has been a transformational year as we expanded in new segments. Year to date in 2021, our fleet increased by 163% in terms of number of vessels through 88 net vessel additions. Through these S and P activities, we increased our fleet size and reduced average age for our existing segments.

For container ships, we increased fleet size by 330% and reduced average age by 24%. For dry bulk, we increased capacity by 36% and reduced average age by 18%. Of course, we also entered into the crude and product tanker segments. In sum, as shown on the chart on the bottom of the slide, we have increased available days by 171 to forty sixty eight available days, thereby accumulating significant scale in a short period of time. Slide six details our company highlights.

As I mentioned previously, Navios Partners is one of the largest U. S. Publicly listed companies with over 140 vessels. We operate in three segments, have 15 diversified vessel types and serve over 10 end markets. Our diversification strategy creates resilience in the overall business model and enable us to mitigate individual segment volatility, while also allowing us to leverage each independent sector's fundamentals.

The integration also provides flexibility in our operational and financial strategies as we charter, sell and purchase vessels and obtain debt finance. The net result is that we should have more predictable entity level returns. We also anticipate that diversification and scale should make NMM a more attractive investment platform as we take advantage of global trade patterns. Our three pillars are now working well. Both drybulk and containership sectors are performing and the tanker sector has improved materially in the past few months with more improvement expected.

Slide seven reviews our recent developments. During Q3, NMM generated $228,000,000 in revenue, dollars 145,200,000.0 in adjusted EBITDA and $162,100,000 in net income. For the nine months of 2021, NMM generated $445,000,000 with $69,800,000 in adjusted EBITDA and $398,600,000 in net income. In 2021, we've completed two mergers. Our merger with Navios Containers increased our containerships by 29 vessels.

The recently completed merger with Navios Acquisition gave us a strong foothold in the tanker sector with 45 tanker vessels. We also continue to renew and expand our fleet. Year to date, we expanded our drybulk fleet by 10 vessels increasing drybulk capacity by 36% and reducing its average age by 18%. The busy acquisition calendar has not distracted us from our balance sheet. We remain disciplined.

Our cash balance was $141,200,000 as of September 30, and we have 28.3% in net LTV. About 91% of our debt is covered by the scrap value of our vessels alone. We have been taking advantage of robust market. NMM has $2,200,000,000 of contracted revenue. We will be profitable in Q4 as contracted revenue exceeds total expenses by $57,000,000 yet we still have two thousand four hundred and seventy three open or index linked days.

For 2022, we expect a historically low breakeven of $2,469 per open day with 20 with our busy acquisition calendars has not distracted from our balance sheet. We remain disciplined. Our cash balance was $141,200,000 as of September 30 and we have 28.3% in net LTV. About 91% of our debt is covered by the scrap value of our vessels alone. We have been taking advantage of low pass markets.

NMM has $2,200,000,000 of contracted revenue. We have been profitable in Q4 as contracted revenue increased total expenses by $57,000,000 yet we still have about 2473 open air index linked dates. For 2022, we expect a historically low breakeven of $2,469 per open day with 58% our forty seven thousand two hundred and sixty eight available days open or indexed link providing us with the market exposure. Diversification takes advantage of global trade patterns and Slide eight illustrates this. Our balanced exposure across the drybulk, containership and tanker segments allow us to mitigate normal industry cyclicality and leverage fundamentals on offer across all sectors through our chartering and capital allocation and financing strategy.

Currently, in our containership segment, given the continued strength of the market, we have been locking in long term charters. As a result, we fixed 88.1% of our available containership days for 2022 and have $1,600,000,000 in total contracted revenue on charters extending through 02/1930. Moving from strength to strength in our drybulk segment, we continue to benefit from a strong spot market with 87% of our twenty twenty two available days exposed to market rates and we remain positioned to fix vessels while untracked period charters are available. Lastly, within our tanker segment, our long term contracts provide protection and 65% of our twenty twenty two available days remain open to capture the ongoing market recovery. While we are positioned to capture the market upside through our forward available days, our diversified chartering strategy has enabled us to secure a pipeline of over $2,200,000,000 of contracted revenue.

At this point, I would like to turn the call over to Mr. Stratos Desyprix, our Chief Operating Officer that will take you through the segment data. Stratos?

Speaker 2

Thank you, Angeliki and good morning all. NMM is differentiated by its industry leading scale and diversified sector exposure. Please move to Slide nine, which provides some selected segment data. Navios Partners controls 142 vessels with balanced exposure to the drybulk container ship and tanker segments. Also, we have strengthened stability in our balance sheet.

Net loan to value is about 28.3% in an asset base estimated at over $4,500,000,000 Moreover, Navios optimizes its flexible chartering strategy to leverage our fundamentals across its three sectors and calibrate charter term based upon segment opportunity. We have a contracted revenue pipeline of about $2,200,000,000 and about 58% of our twenty twenty two available days are currently exposed to the market. Our market exposure days are calibrated towards dry bulk and tanker vessels, while about 88% of our containerships are fixed. Slide 10 details our strong operating free cash flow potential. For Q4 of twenty twenty one, our contracted revenue exceeds total expenses by approximately 57,000,000 and we have around two thousand five hundred days with market exposure that will provide additional operating free cash.

For 2022, we have approximately 42% of our open days at $29,350 per day and our contracted revenue provides for a breakeven of $2,469 per open day. We have twenty seven thousand four hundred and thirty seven open and index days that can generate significant operating cash. In Slide 11, you can see the strength and stability of our balance sheet. As of September 30, we had the total cash of $141,200,000 and borrowings of 1,400,000,000.0 Leverage remains very low and net loan to value is 28.3% in an asset base estimated at over $4,500,000,000 Additionally, we have a staggered maturity profile with no significant maturities through 2023. That together with our contracted revenue of $2,200,000,000 provides an enduring platform with significant upside potential.

Turning to Slide 12, you can see some fleet and debt updates. We have fixed 10 of our containerships for long durations creating approximately $690,000,000 in contracted revenue. More specifically, we have contracted our six newbuilding containerships delivering in 2023 and 2024 for five years at an average rate of $37,050 net per day generating about $420,000,000 of contracted revenue. These vessels were acquired for an aggregate purchase price of $370,000,000 We have also chartered out 4,250 TEU containerships for periods between three point five and four point five years generating revenues of approximately $270,000,000 The current average contracted net rate of the four vessels is approximately $2,600 per day. On the S and P, we have sold a 2,006 Panamax vessel for $14,000,000 We are also constantly working on refinancing and extending maturities.

We have arranged a new facility of $72,700,000 for the refinancing of three existing facilities with with short and medium term duration. Additionally, we have agreed a new 52,700,000 bareboat financing for two Capsarmax vessels to be delivered in the second half of twenty twenty two and Q1 of twenty twenty three. I now pass the call to Eric Cironi, our CFO, which will take you through the financial highlights. Eric?

Speaker 3

Thank you, Stratos and good morning all. I will briefly review our unaudited financial results for the third quarter and nine months ended 09/30/2021. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. On 08/25/2021, Navios Partners acquired 62.4% of the equity interest in Navios Acquisition through the acquisition of 44,100,000.0 Navios Acquisition's common shares for an aggregate investment of $150,000,000

Speaker 1

As a result,

Speaker 3

the balance sheet of Navios Acquisition together with the respective purchase price allocation adjustments are included in Navios Partners' balance sheet as of the end of the quarter. However, the results of Navios Acquisition included in the Q3 Navios Partners results are only for the period from August 26 through 09/30/2021. As Angeliki mentioned earlier, the merger with Navios Acquisition was completed on 10/15/2021. I would also like to highlight that 2021 results are not comparable to 2020 as in 2021, NMM acquired two companies and is expected to increase its available days by 85% in 2021 and by 171% in 2022 compared to 2020. Moving to the earnings highlights in slide 13, total revenue for Q3 twenty twenty one was $228,000,000 compared to $64,000,000 for the same period last year due to the expansion of our fleet and the improved time charter equivalent rates for both containers and bulkers.

EBITDA and net income for Q3 twenty twenty one include a $30,900,000 gain related to the sale of three vessels Navios Dedication, Navios Azalea and Harmony N, a $4,000,000 bargain purchase gain upon obtaining control of a Navios Acquisition and $2,900,000 transaction cost in relation to the merger with Navios Acquisition. I know that we were able to sell these vessels for a book gain in this excellent market as we manage our rate profile. Excluding these items, total adjusted EBITDA for Q3 amounted to $145,000,000 compared to $31,000,000 for the same period last year. Total adjusted net income was $130,000,000 compared to $8,800,000 for the same period last year. During the quarter ended 09/30/2021, we had nine thousand and twenty seven available days compared to four thousand four hundred and ninety nine days for Q3 twenty twenty.

Fleet utilization was approximately 99%. The average combined Q3 twenty twenty one time type equivalent rate of our vessels increased by seventy nine percent $24,447 per day. The average Q3 twenty twenty one time charter equivalent rate achieved per segment was bulkers 28,926 per day containers $22,418 per day and tankers $15,066 per day. Moving to the first nine months 2021 period, time charter revenue reached $445,000,000 compared to $158,000,000 in 2020. The result was a combination of the expansion of our fleet and the improved time charter equivalent rates.

Our available days increased by 63% to 20421, while the average nine months 2021 combined time charter equivalent rate increased by 76% to 20991. Fleet utilization was approximately 99%. EBITDA and net income for the first nine months of 2021 include a $90,800,000 gain from equity in net earnings of affiliated companies, a $48,000,000 bargain purchase gain upon obtaining control of Navios Containers and Navios Acquisition, a $30,300,000 gain related to the sale of seven of our vessels and $2,900,000 transaction costs in relation to the merger with Navios Acquisition. Excluding these items, adjusted EBITDA for the nine months of 2021 amounted to about $270,000,000 compared to $64,000,000 for the same period last year. Adjusted net income for the first nine months of 2021 amounted to $242,000,000 compared to a $2,900,000 loss for the same period last year.

Turning to Slide 14, I will briefly discuss some key balance sheet data as of 09/30/2021. Cash and cash equivalents were $141,000,000 Long term borrowings including the current portion net of deferred fees amounted to 1,400,000,000.0 Net debt to book capitalization was at a comfortable level of 41.7%. Turning to Slide 15, you can see our ESG initiatives. Maritime shipping is the most environmentally friendly means of transportation as it is the most carbon efficient mode of transport. We aspire to have zero emissions by 02/1950.

In this process, we have been pioneering and are adopting certain environmental regulations up to two years in advance aiming to be one of the first fleets to achieve full compliance. Navios is a socially conscious group whose core values include diversity, inclusion and safety. We have very strong corporate governance and clear code of ethics. Our Board is composed by majority independent directors and independent committees that oversee our management and operations. I'll now pass the call to George Agniotis, Executive Vice President of Business Development to discuss the industry section.

George?

Speaker 2

Thank you, Harry. Please turn to Slide 17 for the review of the drybulk industry. The IMF projects global GDP growth at 5.9% for twenty twenty one and four point nine percent for 2022. The rate for 2021 is the highest in almost fifty years and it is led by a 7.2% expansion in China, India and Developing Asia. Vaccine rollouts continued fiscal stimulus and governmental infrastructure projects should continue to support economic growth.

2021 drybulk trade is projected to increase by 4.5% and further increased by 2.9% in 2022. Rates in all asset classes rose sharply reflecting surging trade driven by strong demand for both major and minor bulk commodities. The BDI average for Q3 was $3,732 the highest quarterly average since 02/2008. In fact, the BDI reached $5,650 on October 7, the highest level in thirteen years led by increased iron ore exports out of Brazil pushing Capesize rates to just under $90,000 per day in early October. More recently, the freight market has corrected on the back of Chinese winter steel production limits and power shortages due to unavailability of gas and coal.

However, it should be noted that current rates are still about two times the ten year averages. Turning to Slide 18. Post pandemic stimulus measures in the advanced economies and increasing industrial production has fueled demand for the three major bulk cargoes, specifically the iron ore global trade is expected to grow by 3.4 in 2021 and two point four percent in 2022. Additional availability of Atlantic exports to the Far East are expected to increase as steel mills replenish stockpiles. Concerning coal, high gas prices have driven power plants to switch back to coal fired power generation and the IEA estimates that global coal fired electricity generation is expected to rise by nearly 5% this year and exceed pre pandemic levels before increasing a further 3% to an all time high in 2022.

On the grain side, global grain trade continues to be supported by an ever increasing world population, food security issues driven by the pandemic as well as increasing broadening demand worldwide. Global grain trade has been growing by 5% CAGR since 02/2008, mainly driven by Asian demand. Please turn to Slide 19. The current order book stands at 6.8% of the fleet, one of the lowest on record. Net fleet growth for 2021 is expected at 3.5% and only 1.5% for 2022 below the projected increase in drybulk demand for both years.

Vessels over 20 years of age are about 8.6% of the total fleet, which compares favorably with the historically low order book. In concluding our drybulk sector review, demand is forecast to outpace net fleet growth in both 2021 and 2022, a strong demand for natural resources combined with continuing COVID related logistical disruptions and a slowing pace of newbuilding deliveries all support healthy levels of current and future freight rates. Please turn to Slide 21 focusing on the container industry. Post COVID stimulus measures have caused a sharp recovery of demand for goods in Western OECD economies as noted on the two lower charts. This has led to a change in trading patterns for the container ships, which has resulted in a historic turnaround in rates.

As you can see in the blue box on the lower right, increases in demand for goods for congestion and restocking will lead to containership demand growth of 6.3% in 2021 and three point nine percent in 2022. Turning to Slide '22, fleet growth is expected to be 4.2% this year and 3.8 for 2022. Even with the increase in newbuilding orders, demand is forecast to outpace net fleet growth in both 2021 and 2022. It should be noted that about 73% of the order book is for 13,000 TEU vessels or larger. In addition, 10.4% of the fleet is currently 20 years of age or older.

This could lead to a pickup in scrapping in 2022 as sky scrapping prices combined with IMO 2023 CO2 reduction rules may induce a portion of the overage fleet to scrap. Conclusion, positive demand fundamentals mainly due to the start of economic activity around the world along with reduced fleet availability should support the containerized shipping industry. Please turn now to Slide 24 for the review of the tanker industry. Governments having put in place emergency monitoring fiscal plans to support their economies have kick started faster than expected recovery in the world economy. This has led the IEA to project Q4 twenty twenty one oil demand to return close to twenty nineteen levels, which is shown on the graph on the lower left.

This increase in demand has led to a decline in OECD crude oil inventories, which have fallen below their five year average since February with the largest decline coming in September as shown on the graph on the lower right. Turning to Slide '25, VLCC net fleet growth is projected at 3.6 for 2021 and only 1.6% for 2022. This decline can be partially attributed to owners' hesitance towards the long live assets in light of macroeconomic uncertainty and engine technology concerns due to upcoming CO2 restrictions. The current order book is 8.3 of the fleet. Vessels over 20 years of age are 11.3% of the total fleet, which compares favorably with the low order book.

Finally, turning to Slide '26, product tanker net fleet growth is projected at 2.4% for 2021 and only 1.9% for 2022. The current product tanker order book is 6% of the fleet, which compares favorably with the 8.4% of the fleet, which is 20 years of age or older. We believe that the overall tanker order book and fleet are well balanced as the IMO 2023 and ballast water management regulations will lead to some vessel retirements in the coming months. In concluding, the tanker market continues to remain challenged following reduced crude and product demand associated with COVID restraints. However, OPEC plus export quotas along with global oil demand returning to 2019 levels have brought OECD inventories below their five year average.

These together with near record low order book should boost crude and product tanker rates in the near term. This concludes my presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Speaker 1

Thank you, George. This completes our formal presentation and we open the call to questions.

Speaker 4

We'll take our first question from Randy Giveans with Jefferies.

Speaker 5

Howdy team Navios. Congrats again on the merger.

Speaker 1

Good morning. Good morning. Thank you.

Speaker 5

Yes. So starting off with the merger, your fleet is clearly massive. It's diverse. So a few questions around this. You mentioned that you sold a 2,006 Panamax, but still have a handful of two thousand and four and two thousand and five built vessels.

So any plans for further asset sales, especially on those older vessels? And then I guess on the other hand, any plans for further growth in either of the three sectors that you now have exposure to?

Speaker 1

I think the one issue that I'd say is that no matter what on the 140 vessel fleet, you will have some replacements. So think about something between five to 10 vessels to minimum per year you will have to replace because either there is a survey or you see that that vessel may have may come into you see that potentially 2023 may have more consumption for different technological or commercial reasons or CapEx that you have to put. So this is an ongoing process that we will be going over and over again depending on and you have seen us doing that even in the top every market, in the bottom, on the top, there is a continuous process that we'll do replacements. It doesn't indicate. Now on actual investment, we just completed $1,000,000,000 investment, 45 vessels in the tanker segment.

And I think on it seems to be that Q3 was the low part of the tanker segment and we are seeing the market slowly recovering. So this is our big investment for Q3. And what we are looking is how this investment we did will play. What we have done is that we have created a fortress balance sheet by chartering the container sector, which is extremely strong. And we have seen that we have $1,000,000,000 contracted revenue on containers, 2,200,000,000.0 overall on the company.

The advantage we took on the container vessels gave us a historically low breakeven of $2,469 per open day in 2022. So basically, we have a fortress balance sheet. We can be very comfortable watching the drybulk market develop. We have 86% of our available days in the drybulk open to the market exposure because we are bullish on that. And we have the tanker sector that we are watching as it recovers.

So this is basically what we have been doing and what we are seeing developing.

Speaker 5

Got it. No, yes, that makes sense. And then you mentioned the word replacement, right? So you have 140 to 150 vessels. Is that the kind of range you want to stay with?

Or would those kind of asset sales kind of bring down the fleet levels from these numbers?

Speaker 1

There's always a replacement to keep one of the things that we said from and I think Stratos also mentioned, we have an average age. We are about two years below industry average. So this portfolio in order to be kept on the same age below industry average and create you will always have a 10%, 15% reference. So it's not that we are basically it's not a number, but you will need to do sell and manage the technology. If we find opportunities, we can always expand and that is something that we are not shy of doing.

But I'm talking about as a portfolio, you like to keep an age profile characteristic somehow on a certain level.

Speaker 5

Yes. No, that's fair. I think the sales of the older ones will slowly reduce that or I guess keep it relatively young. All right. Second question, looking at Slides eleven and fourteen, clearly showing the strength of your balance sheet.

You mentioned earlier in the call, your fixed charter backlog is giving you pretty substantial cash flow visibility, very low spot day breakevens. So I guess going forward, is there a specific debt target or leverage ratio you're pursuing before kind of switching to some kind of return of capital, be it either repurchasing units at a massive discount to NAV or increasing the quarterly distribution?

Speaker 1

I think the number one is that what we see is a good positioning on the company. You have this low breakeven, 2,400, historically the lowest. But don't forget, we are 86% of our available days open on drybulk. And the tanker sector is just coming off just coming up from a very low point, which was the lowest point in Q3. So basically, what we want to see is number one, this market drybulk to materialize, which we are bullish about it, but also to a recovery on the tanker segment.

So on that, what after these two conditions, are seeing as a return a total return to our investor as an important part of our strategy.

Speaker 5

Got it. And do you have a maybe preference there in terms of repurchases or distribution increase?

Speaker 1

I think this is something that we we are very

Speaker 5

Awesome. Well, that's great to hear. That's it for me. Thank you so much.

Speaker 1

Thank you.

Speaker 4

We'll go next to Omar Nokov, Clarkson Securities.

Speaker 6

Thank you. Hey, guys. Good morning. Also, good afternoon and also congratulations on your first call here post merger. I wanted to maybe follow-up on the commentary you just had with Randy just in terms of deployment of capital.

Right now, you're generating huge sums of cash, and that's likely to grow here as we look ahead with the time charters you just announced on the containers. You can pay down aggressively, you can award shareholders aggressively, and you can actually acquire assets fairly aggressively. In terms of those sort of three, are you willing to rank at the moment of those three, which is the most appealing or if one outranks the other two or any sort of color you can give on how you are thinking strategically about whether you decide to pay down debt, pay back shareholders or grow the company?

Speaker 1

I mean, when we did the transaction, we're about 35% we increased our debt to about 35%. So the target is always to bring down the debt and that is to about 20%. But overall, today, the biggest thing that we have to see is that we have created operationally a unique platform. We have the historically low breakeven gives us on a forty seven thousand days. You have a huge fleet and you have a breakeven per open day of 2,460.

This is unique. But on the other side, we are very exposed to the market. We are 86%, which I think is a rather big percentage for our dry bulk to be opened. But we have the luxury. We see good we see a good market potential, but we have to see it to be aligned.

And also, we have to see that tankers, which we also see a good potential to actually happen. If these conditions happen, the next thing on the market on the debt, I think we are in a we can both allocate on reduction of our debt and also on actually providing to our investors. So this is something that we are focusing very much. But the most important is we need to have the right conditions. We see the potential, but we see we need to see it materialize.

Speaker 6

Thanks, Angeliki. Definitely, it sounds like you have the flexibility across the board with that. And I did want to offload just to ask about the containership charters, which I thought were you ordered those four plus two ships, if I recall. And it was somewhat opportunistic at the time. They were on a speculative basis, I guess, or at least were ordered without charters.

Here, you fixed them for the 37,000 a day, which, as I run the numbers, it looks like a five year payback, which sounds pretty substantial given these are new buildings. In that context, in thinking of deploying capital in the future, we've talked about how maybe tankers are is an appealing asset class to go after because it's the bottom of the market to an extent. But on this containership opportunity, how repeatable could you say that deal is where you ordered those ships and then subsequently contracted them and now you have basically a five, maybe five point five year payback? Is that a repeatable opportunity you think?

Speaker 1

It's like as we drive. If everyone does it, it's not anymore existing. But the reality is just to go back to your question is, there is the following thing. I mean, the capacity of the shipyard capacity has been full and also we see that materials may be going up. So you always have to be very alert to see what is the best area where the opportunity lies.

Sometimes it's in new buildings, sometimes it's in secondhand vessels in different sectors. That is that there is no one formula to this and you need to be always running the different scenarios. We did see one thing that we saw as a great opportunity on the container segment. We saw that the smaller vessels and this is the wide body, the 5,500 TEUs. What is unique what we like about this vessel is about Indonesia flexible vessel, two sixty meters, very nice dimensions.

You can actually take advantage of the point to point transportation that is now developing, the difference on the supply chain and from and all these from just in time to just in case. So all these unique things that we see on the supply chain happening, these vessels we think is a good match. And basically by ordering these vessels, you go away from the Baby Panamax that used to be the vessel that was designed at that time for passing through Panama Canal, but we saw that had a good life afterwards to something that is particularly built for the necessities of the Indonesia trade.

Speaker 6

Yes. Thank you. Definitely looks well timed and a good overall return. Maybe just I know one final one I did want to ask. I noticed in the release and you mentioned it also in your comments just about securing dry bulk charters in the period market when the time makes sense.

Could you just give a flavor of sort of what the liquidity looks like from your perspective in terms of deploying the dry bulk fleet away from spot on time charters? What does the liquidity look like across, say, the one year to three year timeframe?

Speaker 1

I think the you can find that one year to versus three year, you have basically today this company is huge and you don't see really the three year market developing. It will take some time. I mean, there is good I mean, we saw volatility. We went to the gates from 80,000. We are down to around 30,000.

Now 30,000 is a very good level. But purely the volatility that we saw create people are still waiting to make an assessment on period. You need to wait and see that market develop. We are not shy of actually fixing. If you have seen in container segment, what we did, we and this is the example that you see on the charters we just announced, we were fixing one year.

And today, we fixed over four years and over 2.5 times the rate. So you are actually creating this cash flow when the market is right. So we need to wait for the drybulk. We enjoy the we have the luxury because of our balance sheet and our low breakeven to really to have the luxury to be open and to capture the spot market and wait for the period market to come. And this is the strategy going forward.

Speaker 6

Yes. The essence of the diversified fleet. Well, thanks Angeliki for your comments. I'll turn it over.

Speaker 1

Thank you.

Speaker 4

We'll take the next question from James with Citigroup.

Speaker 7

Hey guys, good morning. Just wanted to actually ask about how you're thinking about the capital structure from here. I mean, you've got a much larger asset base, it's more diversified. You're thinking about basically moving forward with an even lower level of leverage than you have. Now is this a point where something like an unsecured piece of debt might make sense, something that basically might be a little bit more permanent pieces of capital?

Just trying to understand how you're thinking about the work to be done on that side.

Speaker 1

The big thing is about the debt. We're looking on reducing further our debt. One other thing we have done is we have about $1,000,000,000 in I mean, Eddie will give the exact numbers, but $1,000,000,000 on debt. We have about commercial banks, about 600 in Japanese and Chinese leases, which provide us more easier governance. So we are creating this with this different two tier financing and this is something we like to keep the flexibility of having the Asian leases plus the commercial banks in Europe.

And overall, we'll have to have low leverage. I think the low leverage is a big driver to our model.

Speaker 7

Got it. And then separately, congestion and supply chain friction is just generally front and center. And obviously, it's been a large factor in the market. But has that lack of visibility to sort of the core demand created any sort of headwind to getting business done on the container shipping side? This is actually more pertinent to the container shipping side, created any sort of headwind to getting any sort of incremental business done or extending for or extending any particular charges of vessels?

Just trying to understand if that's actually sort of impacting your operations outside of just sort of the rate impact. Just trying to understand how the feed through there?

Speaker 1

Big picture just you should understand that all the inefficiency is net positive for our business. So basically, we can fix and you have seen in the container segment, fixed multiyear contracts. The announcement we did between the six newbuildings that we did for five years and four other vessels, we did a quite significant number of what was that $6,690,000,000. 90,000,000 of contracted revenue. So this is a net benefit inefficiency, and we always get, you know, we get advantage of this on the long term period because they need of tonnage.

Speaker 7

Yes. Totally completely understand the benefits to sort of the market capacity and rates. But just trying to understand if basically the lack of visibility has been sort of discouraged to the incremental ordering or sort of any commitments on your customer's part. It doesn't sound like it has, but curious if there's any sort of hold back because of that lack of visibility. Just curious there.

Speaker 1

Sorry, I'm not 100% sure on the question. I cannot it's a little bit hard to hear you. But one of the things I'll say is that we see visibility on chartering, the demand for charters, if I answer your question, and we have seen it. And this is something that actually has benefited us quite significant on this market, especially on the container.

Speaker 7

Thank you.

Speaker 1

Thank you.

Speaker 4

I'll turn the call back over to Angelique for any closing remarks.

Speaker 1

Thank you. This completes our quarterly results for NMM. Thank you.

Speaker 4

This does conclude today's program. Thank you for your participation. You may disconnect at any time.