Navios Partners (NMM) Q1 2026 Earnings Transcript

Image source: The Motley Fool.

Date

Thursday, May 21, 2026 at 8:30 a.m. ET

Call participants

• Chairman and Chief Executive Officer — Angeliki Frangou
• Chief Operating Officer — Efstratios Desypris
• Chief Financial Officer — Erifili Tsironi
• Chief Trading Officer — Vincent Vandewalle

Takeaways

• Net Income -- $106.3 million for the quarter, reflecting the reported bottom-line result.
• EBITDA -- $212.7 million, with adjusted EBITDA of $204 million, representing a $51 million increase compared to the same period last year.
• Revenue -- $357 million, up 17% due to higher combined time charter equivalent rates, despite a 3% reduction in available days.
• Combined TCE Rate -- $25,679 per day, a 21% increase from the comparable quarter last year.
• Segment TCE Rates -- Bulkers saw a 39% increase to $17,632 per day; tankers rose 23% to $32,209; containers increased 4% to $31,696 per day.
• Distribution per Unit -- $0.06 declared for the quarter, representing a 20% increase from the prior level.
• Unit Repurchases -- 240,502 units or 0.8% of the float repurchased for $15.6 million year-to-date; total program has repurchased 5.8% of units outstanding with $16.4 million remaining capacity.
• Backlog for Contracted Revenue -- $4.1 billion, a record high, increased by 16% with approximately $549 million added, including $483.5 million from 8 tankers and $65.2 million from 2 containerships.
• Net Loan-to-Value (LTV) -- 28.3% at quarter end, progressing towards a target range of 20%-25%.
• Available Liquidity -- $593 million, underpinned by $421 million in cash and cash equivalents plus $172 million in facility availability.
• Debt Structure -- $2.2 billion in long-term borrowings, 43% at fixed rates averaging 6.2%; 51% of debt has no LTV covenant; 55 vessels are debt-free.
• Fleet Size and Value -- 173 vessels operated across 3 segments with a combined value of $9.7 billion including newbuildings; $4.6 billion in net vessel equity value for the fleet in the water.
• Fleet Modernization -- Average fleet age of 9.1 years, which is 35% younger than the industry average; tanker fleet average age is 5.5 years, over 60% younger than the global tanker fleet average.
• VLCC Transactions -- Sold two 16-year-old VLCCs for $136.5 million (prices 102% above the 20-year average and 18% above prior peaks); acquired four newbuilding VLCCs for $482 million, chartered for 5 years at $47,763 per day (24% above the 20-year average time charter rate), reducing average VLCC age by almost 40% to 5.9 years.
• Newbuilding Program -- 26 vessels set for delivery through 2029, representing $2.1 billion in investment with $329 million equity remaining to be paid, and $1.5 billion in expected contracted revenue over 5 years.
• Fleet Disposals -- Five vessels sold year-to-date for approximately $190 million: 2 VLCCs ($136.5 million), 2 dry bulk vessels ($22.8 million), and 1 containership ($30 million); vessel sales target older vessels for fleet age reduction and capital recycling.
• Charter Coverage -- 80% of available days fixed, 20% open/indexed for 2026; dry bulk segment has about 40% open or indexed days to maintain market exposure given recent rate improvements.
• Operational Cash Flow Outlook -- 73% of remaining available days for the year fixed at an average rate of $27,859 per day, with contracted revenue exceeding expected total cash cost by $179.2 million and 10,838 open or index-linked days remaining.
• Credit Ratings -- Ba3 by Moody’s and BB by Standard & Poor’s.
• VLCC Newbuild Options -- Four further VLCC options available at the same pricing, subject to market evaluation for potential exercise.
• Contingency and Risk Management -- Robust insurance coverage in place, active risk monitoring, and over half the debt package structured without LTV covenants.

Need a quote from a Motley Fool analyst? Email pr@fool.com

Risks

• Chairman and Chief Executive Officer Frangou cautioned that "It is too early to assess the long-term impact," of the Iranian conflict and resulting closure of the Strait of Hormuz, highlighting the need to monitor global trade disruptions and their effects.
• Chief Trading Officer Vandewalle noted that a "Prolonged Hormuz closure could still trigger a global slowdown or a recessionary demand shock, which could affect all shipping markets."
• Increased fuel costs and supply security concerns are raising rates in the dry bulk and container sectors.
• Chairman and Chief Executive Officer Frangou stated, "this point, unless you end up on a recession, the reality is that you will have a move for buying -- replenishing the oil that has been used and replenishing depleted reserves," but cautioned that "Absent this creating a different situation where you constrain demand, and that is a big question," signaling unresolved downside risks to demand.

Summary

Navios Maritime Partners L.P. (NYSE:NMM) delivered significant earnings growth in the first quarter, reporting robust increases in adjusted net income, adjusted EBITDA, and time charter equivalent rates across all major shipping segments. Management executed disciplined asset sales—particularly the timely divestment of older VLCCs prior to a surge in market rates—and redeployed capital into younger newbuilds at attractive charter rates, driving further fleet modernization and backlog expansion. The company’s proactive risk management, including diversified charter coverage and strengthened balance sheet liquidity, positions Navios to navigate ongoing geopolitical and trade-related uncertainties.

• Management indicated that contracted charter coverage increased backlog by $549 million, with new tanker charters notably boosting forward revenue visibility.
• Capital allocation featured both unit repurchases and a 20% increase in distributions, with approximately $16.4 million in buyback capacity still available.
• Significant progress towards a net LTV target of 20%-25% was reported, aided by prepayments, revolver paydowns, and fleet sales, with the target expected to be reached by year-end.
• Company leaders emphasized strategic fleet renewal, highlighting that 26 newbuild vessels are scheduled for delivery by 2029 with $329 million equity commitments remaining and secured long-term contracts offsetting residual value risk.
• Exposure to Middle East conflict was described as limited, with the company’s charter and fleet mix structured to benefit from rate dislocations rather than direct operational liabilities.

Industry glossary

• VLCC: Very Large Crude Carrier, an oil tanker with a capacity typically between 200,000–320,000 DWT, used for seaborne crude oil transport.
• BCI: Baltic Capesize Index, a benchmark for Capesize dry bulk vessel charter rates.
• TCE Rate: Time Charter Equivalent Rate, a measure of average daily revenue performance across shipping contracts, enabling comparison between various types of charters.
• Net Loan-to-Value (LTV): Ratio of company net debt to the market value of owned vessels, used to assess financial leverage.

Full Conference Call Transcript

Angeliki Frangou: Good morning, and thank you all for joining us on today's call. I am pleased with our results for the first quarter of 2026, in which we reported net income of $106.3 million and EBITDA of $212.7 million. Earnings per common unit were $3.64 for the quarter, and we announced a $0.06 distribution per unit for the quarter. Last quarter, we spoke about the emergence of a new world order, one which trade is used as an instrument of national policy. National security considerations are increasingly central to decision-making and governments are asserting greater control over strategic supply chains. The Iranian conflict underscores this shift.

It also focuses global awareness on the critical importance of the Strait of Hormuz, a vital artery for the movement of essential commodities, from LNG and crude oil to refined products and fertilizers. We expect this conflict to have lasting implications on trade as countries and companies look to reduce their exposure to this choke point and diversify supply routes to safer areas. It is too early to assess the long-term impact, and we are monitoring developments closely. As you can see on Slide 3, our fleet has an average age of 9.1 years compared with an industry average of 13.7 years for our 3 segments.

Our tanker fleet with an average age of 5.5 years is particularly useful relative to the broader tanker market. Overall, Navios fleet modernization program has created a fleet that is almost 35% younger than the industry average and more than 60% younger in comparison to the global tanker fleet. Please turn to Slide 4. Navios is a leading maritime transportation company, owning, operating and chartering a modern fleet of 173 vessels across 3 segments and 15 asset classes. Our fleet is split in 2/3 by value with about 1/3 in each of the tanker, dry bulk and container segments. The overall value of our fleet, including our newbuilding program is $9.7 billion.

As to our fleet in the water, it has $4.6 billion in net vessel equity value. We continue to make headway in reducing our net LTV towards our target of 20%, 25%. At the quarter end, we had a net LTV of 28.3%. Our balance sheet is strong with $593 million available liquidity and credit ratings of Ba3 by Moody's and BB by Standard & Poor's. Please turn to Slide 5. Diversification is our strength, coupled with the culture of risk management. Navios can provide significant optionality. You can see this optionality in our actions over the past quarter, which I will discuss in a moment. We are continuously monitoring and assessing risk. We evaluate and structure transactions diligently.

We also obtained robust insurance coverage, particularly important during a war environment, and we have implemented many tools to manage operational risks. Please turn to Slide 6. This slide lays out our actions since the beginning of the year as we witnessed increasing values in the tanker space. We were disciplined initially taking advantage of a strengthening tanker market. We subsequently leveraged the significant VLCC appetite generated by the Iranian conflict. In early 2026, we observed a firming of VLCC values. We used this opportunity to sell VLCCs with an average age of 16 years for $136.5 million.

Our thinking at the time was that these prices were 102% above the 20-year average and 18% above the prior historical peak value. If there was any upside left, we thought that it was best for others. Subsequently, the Iranian conflict erupted. Spot VLCC rates were in a frenzy and there was a great appetite for VLCC tonnage. We were able to take advantage of these dynamics by engineering a transaction in which we purchased 4 newbuilding VLCCs and charter out each of them for 5-year periods at almost $48,000 per day. This charter rate is about 24% above the 20-year average time charter rate. The VLCC themselves were purchased at values that were only 11% above 20-year averages.

This effective arbitrage de-risked our VLCC fleet expansions as we captured $357 million in contracted revenue and reduced the average age of our VLCC fleet by almost 40% to 5.9 years. I know -- that's a pretty dense sentence. So, let me simplify. We expanded our VLCC fleet by almost 60% with minimal risk in a volatile time, and we have options for 4 more VLCCs that may allow us to continue to expand our fleet further, which we will do if we can do it accretively. Turn now to Slide 7, where we outline what actions we have taken in each of our segments. The net result is summarized on the right-hand part of the slide.

Our backlog for contracted revenue is a record high of $4.1 billion. We increased our backlog by 16% -- and for the remaining 9 months of 2026, we already have excess contracted revenue of a cash cost of $179 million, and we materially reduced our fleet average rate, which now stands at 34% below the market. Please now turn to Slide 8. Our diversified fleet provides revenue visibility and market exposure. For the year, we have 53,713 available days, of which 80% are fixed and 20% are open or indexed.

I would note that while we generally favor long-term charters until recently, period charters made little sense in the dry bulk sector as the rates were weak for a prolonged period of time. Thus, about 40% of our dry bulk fleet is open or indexed. Please turn to Slide 9, recent development. This slide gives you a snapshot of key financial indicators. First quarter performance was strong. We generated $106.3 million of net income and $212.7 million of EBITDA from $357 million of revenue. Our debt package is designed to mitigate risk and give maximum flexibility. Our 28.3% net LTV is on the path to our target, and 43% of our debt is at a fixed interest rate.

In addition, over half of our debt package has no LTV covenant, and we have almost $2 billion of assets that were debt-free. Please turn to Slide 10, where we outline our return of capital program. For the first quarter, we returned about $1.7 million in distributions to our unitholders. This represents a 20% increase from the prior level. In addition, year-to-date in 2026, we repurchased 240,502 units or 0.8% of the float before this repurchase for $15.6 million. Overall, under $100 million unit repurchase program, we have purchased 5.8% of the units outstanding, which in a strange quirk of numbers provide $5.8 value accretion per unit. We have approximately $16.4 million remaining purchase capacity under our original authorization.

Please turn to Slide 11. Navios has been executing its strategy through a challenging environment. We are focused on building a platform of excellency. Over the past 5 years, we have grown contracted revenue by more than 20% to a record high of $4.1 billion. We have an EBITDA run rate of over $750 million and have expanded our fleet value, including a newbuilding program to $9.7 billion. Importantly, we have not sacrificed financial discipline in achieving these goals. In this process, we reduced our net loan-to-value by 37% to 28.3%. We recognize that there is more work ahead.

But in an uncertain world, we believe that our proven platform, combining a diversified fleet with a disciplined risk management culture position us to continue delivering value through any market condition. I now turn the presentation over to Mr. Efstratios Desypris, Navios Partners' Chief Operating Officer. Efstratios?

Efstratios Desypris: Thank you, Angeliki, and good morning, all. Please turn to Slide 12, which details our operating free cash flow potential for the remaining 9 months of 2026. We fixed 73% of available days at a net average rate of $27,869 (sic) [ $27,859] per day. Contracted revenue exceeds estimated total cash operating cost by $179.2 million, and we have 10,838 remaining open or index-linked days, offering meaningful upside. Moving to Slide 15. Our contracted revenue backlog provides strong earnings visibility in an uncertain market. Taking advantage of the current strong rate environment, we grew contracted revenue by 16%, adding approximately $549 million, of which $483.5 million from 8 tankers, $65.2 million from 2 containership vessels.

Total contracted revenue reached a record high of $4.1 billion, $1.7 billion for tankers, $2.1 billion for containerships and $0.3 billion for dry bulk. Charters are extending through 2037 with a diverse group of quality counterparties. Slide 14 summarizes the fleet developments for 2026 year-to-date. During the period, we agreed to acquire 4 newbuilding VLCCs for $482 million with delivery expected in the second half of 2028. The vessels have been chartered out for about 5 years at a net rate of $47,763 per day. As previously announced, we also agreed to acquire 2 scrubber-fitted Japanese newbuilding Capesize vessels for $134.3 million.

These vessels are chartered out for 5 years at a rate linked to the BCI index with an average floor rate of $25,000 per day, an average fixed premium of about $3,000 per day over the index and 50% profit sharing above the floor rate. This structure provides downside protection, stable returns and upside participation. The vessels are expected to be delivered in the second half of 2028 and Q1 of 2029. We also sold 5 vessels for about $190 million, 2 VLCCs with an average age of 16 years for $136.5 million, 2 dry bulk vessels for $22.8 million and one containerships for $30 million.

Additionally, we took delivery of five newbuilding vessels, three Aframax/LR2 vessels, one MR2 vessel and one 7,900 TEU containership. All vessels delivered are chartered out for an average duration of about 5 years at a weighted average net daily rate of $29,065. We continue to actively renew our fleet to maintain a young profile. We have 26 newbuilding vessels delivering to our fleet through 2029, representing $2.1 billion of investment. Based on our financing, both agreed and in process, we have about $329 million of equity remaining to be paid. We have mitigated the residual value risk of our newbuilding program with long-term creditworthy charters expected to generate about $1.5 billion in contracted revenue over a 5-year average charter duration.

I now pass the call to Erifili Tsironi, our CFO, who will take you through the financial highlights. Erifili?

Erifili Tsironi: Thank you, Efstratios, and good morning all. I will briefly review our announced financial results for the first quarter of '26. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. Moving to the earnings highlights on Slide 15. Total revenue for the first quarter of '26 increased by 17% to $357 million compared to $304 million for the same period in '25 due to higher fleet combined time charter equivalent rate despite lower available days. Our combined TCE rate for the first quarter of '26 increased by 21% to $25,679 per day, while our available days decreased by 3% to 13,104 days compared to Q1 '25.

In terms of sector performance, our TCE rate per day was higher in all 3 sectors as follows: 39% increase to $17,632 for our bulkers, 23% increase to $32,209 for our tankers and 4% increase to $31,696 for our containers. EBITDA, net income and earnings per common unit for the first quarter of '26 were adjusted as explained in the slide footnote. Adjusted EBITDA for Q1 '26 increased by $51 million to $204 million compared to Q1 '25. The increase was primarily driven by a $53 million increase in revenues, partly mitigated by $2 million increase in general and administrative expenses, mainly due to the higher euro-dollar exchange rate prevailing during Q1 '26 compared to Q1 '25.

Adjusted net income for Q1 '26 increased by $15 million to $98 million. Adjusted earnings and earnings per common unit for the first quarter of '26 were $3.35 and $3.64, respectively. Turning to Slide 16, I will briefly discuss some key balance sheet data. As of March 31, '26, cash and cash equivalents, including restricted cash and time deposits in excess of 3 months were $421 million. In addition, we have $172 million available under 3 facilities. During the quarter, we paid $21 million under our newbuilding program, net of debt, and we concluded the sale of 1 vessel for $29 million, adding about $22 million cash after debt repayment.

Long-term borrowings, including the current portion and the senior unsecured bond net of deferred fees increased by $12 million to $2.2 billion following the delivery of 2 newbuildings during the quarter. Net debt to book capitalization improved to 31.2%. Slide 17 highlights our debt structure. At quarter end, we had 55 debt-free vessels, including 17 vessels securing our unutilized revolving credit facilities. We have a diversified financing base consisting of leasing structures in Japan and China, more than 15 active banking relationships and more recently, a $300 million senior unsecured bond trading in the Oslo Børs. In addition, 43% of our debt is fixed at an average interest rate of 6.2%, while 51% carries no loan-to-value covenant.

We have also partially mitigated higher interest rate costs by lowering the average margin on our floating rate debt and bareboat liabilities for the in-the-water fleet to 1.8%. I would like to note that the average margin for the committed floating rate debt of our newbuilding program is 1.5%. Our maturity profile is staggered with no significant volumes due in any single year until 2030 when the bond matures. I'll now pass the call to Vincent Vandewalle, Navios Partners' Chief Trading Officer, to take you through the industry section. Vincent?

Vincent Vandewalle: Thank you, Eri. Please turn to Slide 19. The Strait of Hormuz closure has created a major energy and shipping shock, affecting about 20% of the worldwide crude product, and LNG flows. The disruption has tightened tanker availability and driven freight rates sharply higher. Rates for VLCCs hit all-time highs at $602,000 per day and remain elevated with a significant portion of the fleet trapped inside the Gulf. This shortfall has been partly mitigated by increased crude volumes from the U.S.A., Brazil, Venezuela heading to both Europe and Asia adding more ton miles.

Product tanker rates have been extremely strong with MR Atlantic round voyages averaging $75,000 per day and the Pacific round voyages averaging 36,000 since the beginning of the war. Higher fuel costs and security of supply concerns are driving the purchasing and transportation of commodities and finished goods. This has raised rates in the dry bulk sector for both Capes and Panamaxes and has continued to support container time charter rates. The conflicts in the Red Sea and Ukraine continue to add ton miles for most vessel types. With negotiations between the U.S. and Iran moving slowly and the Strait of Hormuz effectively closed, vessel utilization will continue to run at high levels, supporting elevated rates for the near term.

Medium-term trade adjustments depend on how long oil prices stay elevated and whether demand for other commodities like coal rise to substitute for LNG or decreased fertilizer availability affects crop supply later this year. Prolonged Hormuz closure could still trigger a global slowdown or a recessionary demand shock, which could affect all shipping markets. Please turn to Slide 20. Navios direct exposure to the Middle East conflict is limited and our charter and fleet mix position us to benefit from disruption rather than absorb it.

In dry bulk, Cape rates have risen from $28,000 per day before the war to $45,000 a day recently and as an increased coal demand to replace lost Gulf LNG cargoes to add to seasonal strength. Our index-linked charters allow us to benefit from a higher spot market due to these higher coal volumes as well as the seasonally strong iron ore, bauxite and grain volumes.

In tankers, VLCC rates peaked at $602,000 per day on March 16, and stood recently at $447,000 per day as tanker supply remains disrupted with charters seek to control tonnage to benefit from tighter market conditions and to be able to transport any cargoes that become available as all is released from strategic reserves or from increased production. Most of Navios vessels are fixed on time charter, providing continued revenue with 4 ships trading spot or in pools or having profit sharing to capture market upside. In addition, our VLCC newbuildings will provide modern eco ships to replace the older fleet.

Container rates have been remained elevated as Red Sea diversions continue and the redirection of cargoes bound for the Gulf or adding to ton miles. Our entire containership fleet is fixed on long-term charters, providing for a stable contracted cash flow. Across all 3 sectors, Navios combines limited direct exposure to the conflict with meaningful upside to the tanker and dry bulk dislocation with preserving contracted cash flow stability. Please turn to Slide 22 for the review of the dry bulk industry. Demand growth for dry bulk trade has been relatively stable over the last 25 years at about 4% average annual ton-mile growth.

The current order book stands at about 30% of the total fleet and will remain low due to high newbuilding prices, uncertainty about new fuel regulations and yard availability and general market outlook. The fleet is aging quickly with 39% of the vessels 15 years old and with all the ships far exceeding those on order, supply should be constrained over the medium term. Please turn to Slide 23. The main driver of dry bulk demand will be strong Atlantic Basin iron ore growth over the next several years with new projects in Guinea, Brazil and Liberia.

The largest new project is Simandou in Guinea, which started shipments at the end of last year and is expected to ramp up to 120 million by '27. April's 8 shipments jumped 4x from 2 in March. Vale in Brazil has 3 new projects totaling 50 million tonnes expected to start exporting by the end of '26. Liberia will add 10 million tonnes of exports in '26. In total, these 180 million tons are all long-haul miles trading, creating demand for an additional 249 Capes. With the current order book of only 207 capes due in '28, a further tightening of supply and demand is expected over the next few years, benefiting rates.

Overall, the dry bulk market looks positive based on steady long-term demand growth and a constrained supply of vessels. Please turn to Slide 25 for the review of the tanker industry. As to supply, we see a tanker order book of 23%. About 50% of the fleet is already 15 years old, rising quickly in the next few years. With older vessels exceeding the order book and yards offering first deliveries in late '28 or early '29, supply is set to be tight for several years. Please turn to Slide 26. The U.S. Office of Foreign Assets Control, OFAC, the EU and the U.K. continue to sanction Russian and Iranian oil revenue and ships delivering their crude and products.

The U.S. recently imposed secondary sanctions on certain Chinese refineries that have purchased Iranian crude and have seized 2 Iranian VLCCs laden with crude oil and disabled the third one was heading back to Iran to load. These tighter sanctions have 2 main effects. Sanctioned oil volumes from these countries have more difficulty finding willing buyers, raising demand for compliant barrels and non-sanctioned vessels to carry that oil. With 855 mostly overaged tankers now sanctioned, the fleet has already seen a significant reduction of about 15% of total capacity. The tanker market also looks positive over the medium term based on a low order book compared with an aging and reduced fleet due to sanctions.

Please turn to Slide 28 for a review of the container industry. After the COVID pandemic, containership orders were mainly for the biggest units with fleet expansion in large ships set to continue at high levels. Currently, 75% of the order book is for ships with 9,000 TEU capacity or greater and only 21% of the order book is for 2,000 to 9,000 TEU capacity where Navios is most active. Smaller segments of the fleet are well positioned to take advantage of shifting trading patterns. As shown on the right-hand graph, growth in non-mainland trades far exceeds the traditional main trades to the U.S. and Europe due to tariffs and higher growth in developing countries.

Trades involving the Southern Hemisphere, mostly served by smaller sized vessels are expected to see continued health growth as this trade shift continues. Overall, Navios fleet is well positioned within the container market and continues to benefit from long-term employment with our high-quality charters. This concludes our presentation. I would now like to turn the call over to Angeliki Frangou for her final comments. Angeliki?

Angeliki Frangou: Thank you, Vincent. And this concludes our formal presentation. We open the call to questions.

Operator: [Operator Instructions] Our first question today comes from Omar Nokta with Clarksons Securities.

Omar Nokta: Always very thorough. Good update on the business and the markets. Just a couple of questions from me. As we kind of think about things, you've had a fairly balanced fleet here across tankers, dry bulk and containers. And also basically, all 3 are firing, you could say, on all cylinders, obviously, within a cloud of uncertainty. But the cash is starting to come in here a bit more aggressively now, especially as we kind of look forward to 2Q based off what we're seeing in dry bulk. How do you think about how this capital gets deployed as it starts to come in, in bigger amounts? Obviously, you've continued this rejuvenation approach as you've highlighted.

But as we think about this cash as it comes in, how do you balance where that goes in terms of keeping it on the balance sheet or paying down debt? Do you double down and add more vessels from here? Do you step up returns to shareholders? How, I guess, do you evaluate these different options given just how strong the cash is starting to come in?

Angeliki Frangou: Omar, I mean, actually, you know that we are a disciplined company. We have a target of reducing our LTV, which we are basically now very close to the 2025, as we said. We generate good cash flows on cash flows. And what we care about is -- we have a total return of policy of capital to our investors through dividends, buyback, which we are -- obviously, is a Board decision that we are very committed on that. But very importantly is also we redeployed cash and create NAV.

Just -- I mean, you have been familiar with us, and you have seen when we started consolidating about over 3 years ago, what we have done, we doubled our NAV by building good transactions, cash flows, and backlog. That's a lot of effort. It sounds -- and at the same time, we are increasing our share price. So, these are the drivers of the market. And basically, this transaction that we actually announced today is basically this kind of a strategy. It's basically 2 different transactions. We sold two VLCCs before the Iranian war started. Why? Because we saw good values.

You had 16-year-old vessels, and we saw that the values of the vessels came -- became double the 20-year average value. So -- and about 18% above the historical peak. I'm not saying that the market could not have gone up. We don't know. But we left the rest. We prefer to sell those vessels and because we left the upside to someone else. Then when the war started, we saw that there was a strong demand for VLCC.

So, we canvassed the area and we spotted a good shipyard with the engines we wanted, and we went and we did 4 new buildings with optional transaction, and that gave us the ability to really fix order vessels at 11% of the historical 20-year average value on new buildings, while fixing them for 5 years at almost 25% of the rate -- the historical rate. This is kind of transaction that our platform is here, and we will do everything possible, return capital while creating NAV that really drives the long-term trends for our company. And we will do different strategy for different sectors. I mean you saw the way we stepped in 2026.

When we stepped in on the dry sector, we were very -- we're about 25% fixed because we saw -- we didn't see the long-term rates that made sense. We captured part of the spot market today. So, it is a mix of a strategy that the customer balances, the low leverage and our ability to really act on different ways where we see opportunities.

Omar Nokta: Angeliki -- very good summation of the approach. And I guess you did touch on those newbuildings, which I kind of wanted to ask a bit, clearly, very much an obvious way in terms of acquiring these newbuildings and derisking them with charters. And it looks like you're going to be able to pay down a good chunk of that investment in that initial charter. It's interesting because it seems like you canvassed this approach shortly after the war and you were able to secure a contract fairly quickly. As we think about those options that you have, I think you mentioned there's 2 newbuilding options.

What's the likelihood that if you had that -- if you place them, you'd be able to repeat this type of charter? Is it that liquid of a TC market to be able to do that in conjunction? Or would you be taking on some risk by ordering those vessels?

Angeliki Frangou: You know the Navios MO. I mean we are not changing the way we act. So, the issue is that we have 2 plus 2 options. And we see interest on the vessels. We are reviewing opportunities. And if we have something, we will exercise. This is options that we can exercise if we like.

Omar Nokta: Okay. And then maybe just one final very -- hopefully, just a simple accounting question. I think I have in my notes at year-end, the newbuilding installments or the deposits on the balance sheet amounted to about $470 million. Do you have an updated figure for quarter end?

Angeliki Frangou: What do you mean? How much we have already paid for the newbuildings?

Omar Nokta: Yes.

Angeliki Frangou: In the quarter, just $21 million, but. You want the cumulative, maybe I will send the figure to you better. $475 million cumulative and $21 million during the quarter.

Operator: Our next question will come from Kristoffer Skeie with Arctic Securities.

Kristoffer Skeie: Congrats on another good quarter. Angeliki, I must say you are one of few shipowners I talked to you right after the beginning of the war who was actually bullish on tankers and that paid out excellent. So, a good call. I just want to ask, given how strong the market is, I want to ask about charter backlog strategy. I mean those 4 VLCCs were -- seems like a really good deal. But going forward, should we expect continued emphasis on locking in similar type deals? So, could we see you sort of taking more value in retaining spot exposure, especially sort of how bright the dry bulk outlook is currently also?

Angeliki Frangou: I will tell you the truth. I never know where the opportunity will come. To be honest, we have seen that -- today, you can see opportunities on even the dry bulk to do period charters. So, the reason you see we are open is because we watch the market and we select the right time. On the tankers, we saw a good opportunity for 5-year deals at about 18%, 20% above the historical rate, and we fixed because it did make sense with the exposure we had. On the dry bulk today, you see that there is a healthy -- all of a sudden is developing a market where it can be a 2-, 3-year period.

So, I will say that this quarter, we fixed quite significant about -- you saw a quite significant backlog of about $550 million, which is significant. But there is always a strategy to add to our long-term charters if we see attractive deals. And I will say another thing, we are watching very much the Strait and how that will shape the world because this is the most important thing that we have to be mindful. It is when and if -- at the point where the Strait of Hormuz opens, there will be a new world order, and we will have to define what we like to do at that point.

I think this is something we are very mindful.

Kristoffer Skeie: No, sure. And then on those 4 VLCCs, which you added them, is this a resale with another owner? Or is it straight with the yard? And sort of can you comment a bit on terms and option price levels and these things?

Angeliki Frangou: No, it's hard work of creating the deal. So, we have a good team that works a lot with aspects. The bad thing is that I'm an engineer, so, I always end up to become too much of an engineer. So, it's aspects, specification are machinery leased and due diligence yard and the whole thing.

Kristoffer Skeie: So, you have ordered it straight from the yard. It's a new order. It's nothing that's already in order.

Angeliki Frangou: Yes.

Kristoffer Skeie: Yes. And the option price is at the same price or?

Angeliki Frangou: Yes.

Kristoffer Skeie: Yes. Okay. And final one for me. As you commented on net LTV is dropping fast based on fleet on the water, how should we think about the trajectory towards 25% when -- given you have some committed newbuild CapEx and upcoming deliveries. So, what's your sort of internal note on when that's going to happen? And when that happens, sort of is it buybacks we should expect?

Angeliki Frangou: No, I think we are working towards the end of the year. We're following the bond. Also, we are doing some prepayments. If you see, we have basically paid down all our revolvers. So, actually, I think by the end of the year, we are in a good position to reach the target.

Operator: And our next question will come from Stephanie Moore with Jefferies.

Stephanie Benjamin Moore: I appreciate the very thorough presentation here this morning. I guess I wanted to touch a little bit about, I guess, capital allocation in some respects. But you did sell, I think, 5 vessels year-to-date, and you're taking delivery of several new buildings. So, I guess how active do you expect to be on asset sales from here? And then which segments or age bands are most likely? And is the goal kind of age reduction, deleveraging, recycling into higher return assets? I would love to get your just general thoughts on asset sales here and the optionality that it creates.

Angeliki Frangou: Actually, we see -- I mean, the older vessels, we see as a natural replacement. So, you saw that we sold on the dry sector. We sold vessels that we're about 18 years old. I mean it does make sense, absolute sense to sell those vessels. And also, I mean, the replacement is always on the older fleet. And depending on the opportunity, we step in on newbuilding. So, it was on -- and this is something that we'll continue to be doing. I mean we like to reduce the average age of our fleet. We reduced it by 1/3, which is quite significant, of course, because we also bought the VLCCs. But this is a continued strategy.

If you see it over the -- I mean, we sold, I would say, on the last 3 years, we sold over 50 vessels almost and redeployed 1,000 younger vessels. Another example is the way we did with the VLCCs, 16 years at very attractive to historically. We saw the good earning capacity of those vessels. But we thought that the values we had by historical standards, this was a very attractive point to sell. You double the 20-year values of 16-year-old vessels. So, it did make sense. So, that's what we did. This is a strategy we will continue. I mean, depending what sector gives us the opportunity and redeploy where we find the maximum value.

Stephanie Benjamin Moore: No, that's really helpful. And then I just want to take maybe a higher-level question here. But with the Hormuz disruption continuing and it does continue to tighten tanker availability and pushing rates higher. I'd love to get just your thoughts in terms of maybe some of the second order impacts here you're watching across your other segments. Anything that we should think about if this conflict does persist longer than maybe everyone expected at first, if that changes anything else across, again, your other segments, just given you are diversified outside of just tankers. So, again, higher level there, but I would love to get your thoughts.

Angeliki Frangou: I think this is a good question. I'll tell you one thing. I mean you have a deficit of oil. This deficit is 0.5 billion barrels over the period when the Strait of Hormuz will open that at this point, unless you end up on a recession, the reality is that you will have a move for buying -- replenishing the oil that has been used and replenishing depleted reserves. The other thing, naturally, you will go as there is for 1 metric ton of gas is equivalent to 2 metric tons of coal. You will see that drivers continue. You will see more fertilizers and other commodities move on the dry. So, you can see the macro level drivers.

Absent this creating a different situation where you constrain demand, and that is a big question. So, we are watching very carefully the market, and we are trying to assess to act as prudently as possible. The one good thing about Navios is that you have this good -- this backlog, you have the security and the speed of your earnings. So, we can be very quick on acting in any way we see that makes sense.

Operator: At this time, there are no further questions in queue. I will now turn the meeting back to Angeliki for closing comments.

Angeliki Frangou: Thank you. This completes our Q1 results.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.