Navios Maritime (NMM) Q2 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Aug. 20, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairwoman and Chief Executive Officer-Angeliki Frangou
• Chief Operating Officer-Stratos Desypris
• Chief Financial Officer-Erifili Tsironi
• Chief Trading Officer-Vincent Vandewalle

TAKEAWAYS

• Revenue -- $410.2 million, representing a 25% increase compared to the second quarter of 2025 due to higher time charter equivalent rates.
• Net Income -- $167.9 million, compared to $118.2 million in the prior year period.
• EBITDA -- $275.2 million, driven by the expansion of the vessel fleet and improved charter rates.
• Adjusted EBITDA -- $242 million, representing a $70 million increase over the second quarter of 2025.
• Earnings Per Common Unit -- $5.78, reflecting the improved bottom-line performance for the quarter.
• Adjusted Earnings Per Common Unit -- $4.65, after adjusting for certain non-recurring items.
• Cash Distribution -- $0.06 per unit, declared for the quarter.
• Contracted Revenue Backlog -- $4.4 billion, extending through 2037 with 88% of 2026 available days already fixed.
• Net Loan-to-Value (LTV) -- 27.9%, demonstrating progress toward the management target of 20% to 25%.
• Available Liquidity -- $625 million, comprised of $469 million in cash and $156 million in available revolving credit facilities.
• Fleet Age -- 8.7 years, which is approximately 40% younger than the industry average of 13.7 years.
• Tanker Newbuildings -- 7 Very Large Crude Carriers (VLCCs) acquired for $844 million, with charters expected to generate approximately $700 million in revenue.
• Dry Bulk Newbuildings -- 3 Capesize vessels purchased for $204 million, two of which are fixed on 5-year charters with minimum contracted revenue of $86 million.
• Vessel Sales -- $223.8 million in aggregate proceeds from the sale of two 16-year-old VLCCs, two 18-year-old Panamax vessels, and two 19-year-old containerships.
• Time Charter Equivalent (TCE) Rates -- $28,512 per day overall, with tankers at $33,159, containerships at $31,191, and bulkers at $23,682 per day.
• Newbuilding Program -- 29 vessels delivering through 2029, representing a total investment of $2.5 billion.
• Unit Repurchase Program -- $200 million in new authorization, following the completion of 1.9 million unit repurchases for $92.6 million since the second quarter of 2024.
• Debt Profile -- $2.26 billion in long-term borrowings, with 43% of debt at fixed rates and 50% carrying no loan-to-value covenants.
• Sanctioned Tanker Capacity -- 15.3% of total global capacity, reflecting 875 tankers currently under sanctions that restrict available supply.
• Dry Bulk Supply Tightening -- 39% of the global fleet is 15 years old or older, while the current order book stands at 14% of the total fleet.

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

RISKS

• Vandewalle warned that prolonged Hormuz closure could still trigger a global slowdown or a recessionary demand shock, which could affect all shipping markets.

SUMMARY

Management reported a strategy focused on fleet modernization and disciplined capital allocation as Navios Maritime Partners L.P. (NYSE:NMM) transitions from mature assets to newbuilding vessels in the tanker and dry bulk segments. The company stated that geopolitical disruptions, specifically chokepoint closures in the Strait of Hormuz and Red Sea, have increased ton-mile demand and tightened global vessel availability. Management confirmed that it is leveraging its diversified 176-vessel platform to mitigate sector-specific volatility while maintaining a contracted revenue backlog that extends through 2037. The company stated that its balance sheet remains a priority, with a focus on reducing net loan-to-value toward a target range of 20% to 25% while continuing to return capital through a newly doubled unit repurchase authorization.

• The company's tanker strategy involves rebuilding the VLCC fleet with modern tonnage, where 11 newbuilding tankers have already secured $893 million in contracted revenue.
• Chief Trading Officer Vandewalle noted that the Simandou project in Guinea ramped up to 9 million tons of long-haul iron ore shipments year-to-date and is expected to reach 120 million tons by 2028.
• Chief Operating Officer Desypris stated, "Contracted revenue exceeds estimated total cash operating cost by $151.2 million" for the remainder of 2026.
• The container segment strategy is currently focused on harvesting value from existing contracts, with $194 million in revenue secured across six vessels.
• CEO Frangou stated, "Our fleet modernization program has created a fleet with almost 40% younger than the industry average," providing competitive advantages in fuel efficiency and operating costs.
• Management noted that 53,546 total available days are scheduled for the year, with 12% remaining open or index-linked to capture potential spot market upside.
• Chief Financial Officer Tsironi indicated that the company has $1.9 billion in debt-free vessel values across 55 vessels, representing potential incremental financing capacity.

INDUSTRY GLOSSARY

• Capesize: The largest class of dry bulk ships, typically used for iron ore and coal, too large to transit the Suez Canal and formerly the Panama Canal.
• LTV (Loan-to-Value): A financial term expressing the ratio of a loan to the value of the asset purchased.
• Panamax: Ships designed to the maximum dimensions of the original locks of the Panama Canal.
• TCE (Time Charter Equivalent): A shipping industry standard used to calculate the average daily revenue performance of a vessel.
• TEU (Twenty-foot Equivalent Unit): A standard measure of a ship's cargo capacity based on a 20-foot-long container.
• VLCC (Very Large Crude Carrier): A large tanker with a capacity between 200,000 and 320,000 deadweight tons.

Full Conference Call Transcript

Operator: Hello, and welcome, everyone joining today's Navios Maritime Partners Q2 2026 Earnings Call. [Operator Instructions] Please note this call is being recorded, and we are standing by if you should need any assistance. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou; Chief Operating Officer, Mr. Stratos Desypris; Chief Financial Officer, Ms. Eri Tsironi; and Chief Trading Officer, Mr. Vincent Vandewalle. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners website at www.navios-mlp.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 could 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 could 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 this information contained in this conference call.

The agenda for today's call is as follows: First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners segment data. Next, Ms. Tsironi will give an overview of Navios Partners' financial results. Then Mr. Vandewalle will provide 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?

Angeliki Frangou: Good morning, and thank you all for joining us on today's call. I am pleased with our results. For the second quarter and first 6 months of 2026, we reported net income of $167.9 million and $274.3 million, EBITDA of $275.2 million and $487.8 million, earnings per common unit of $5.78 and $9.42. We also announced a $0.06 distribution per unit for the quarter. We continue to operate in a world marked with uncertainty and conflict. The war between Russia and Ukraine remains unresolved. The persistent attacks in the Strait of Hormuz and more recent ones in the Red Sea have caused persistent disruptions to global trade flows.

Against this backdrop, trade has been surprisingly resilient and energy prices, while volatile, remain relatively muted. These conflicts are causing lasting implications for global trade patterns. Countries and companies are reassessing their exposure for critical resources to maritime chokepoints. They are placing greater value on supply chain resilience, looking to diversify through alternative suppliers, routes, storage capacity and transportation infrastructure. This trend may have a net effect of creating longer long-haul routes. As you can see on Slide 3, our fleet has an average age of 8.7 years compared to an industry average of 13.7 years. Our tanker fleet with an average age of 5 years is particularly young relative to the broader tanker market.

Overall, Navios fleet modernization program has created a fleet with almost 40% younger than the industry average and about 65% younger in comparison to the global tanker fleet, preparing us for the future. We believe the use of our fleet provides a competitive advantage through, among other things, lower operating cost, better fuel efficiency and higher charterer preference. Please turn to Slide 4. Navios is a leading maritime transportation company owning, operating and chartering a modern fleet of 176 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 a newbuilding program is $10.2 billion. Our fleet in the water has a $4.8 billion in net vessel equity value. We continue to make headway in reducing our net LTV toward our target of 20% to 25%. At the quarter end, we had a net LTV of 27.9%. Our balance sheet is strong with $625 million available liquidity and credit ratings of Ba3 from Moody's and BB from S&P. Please turn to Slide 5. Diversification is a core strength of Navios and our platform provides optionality across markets.

We complement this flexibility with a disciplined risk management culture, continuously monitoring and assessing our exposures, diligently evaluating and structuring transactions and maintaining robust insurance coverage, particularly important in a war risk environment. Please turn to Slide 6. Since the beginning of the year, we have acted to capitalize on a robust tanker market and reposition our VLCC fleet for both the current cycle and the years ahead. We initially sold two 16-year-old VLCCs for an aggregate amount of $136.5 million. Sale prices were approximately 18% above the prior historical peak for vessels of this age. We subsequently acquired 7 newbuilding VLCCs for an aggregate purchase price of $844 million, including the 1 vessel that remains subject to ongoing discussions.

We have entered into period charters for these vessels for an average period of 6.1 years at an average net daily rate of $45,224. These transactions allow us to rebuild our VLCC fleet with modern tonnage supported by long-term employment. The associated charter arrangements are expected to generate approximately $700 million of revenue while reducing our residual value exposure measured at the end of the initial charters to roughly 40% below the 20-year historical average. Across the entire tanker segment, we have secured a total of $922 million of contracted revenue from 14 vessels with an average charter duration of approximately 5 years. Of this total, $893 million relates to 11 newbuilding tankers.

This strategy enhances cash flow visibility, modernizes the fleet and positions the company to benefit from the current tanker market strength while retaining substantial upside for the next cycle. Turning to our Dry Bulk segment. There, we are systematically rotating into larger, more fuel-efficient vessels while increasing the quality and visibility of our contracted cash flows. We sold 2 Panamax vessels with an average age of 18 years for aggregate proceeds of $22.8 million. We then reinvested in 3 newbuilding Capesize vessels for an aggregate purchase price of $204 million. Two of these Capesize newbuildings have been fixed on 5-year charters, providing a minimum of $86 million in contracted revenue in addition to profit sharing potentially.

Across the dry bulk fleet, we have secured $125 million of minimum contracted revenue from 4 vessels with an average charter duration of approximately 3 years. In container ships, our focus is on harvesting the value of contracted backlog while preserving flexibility for future capital allocation. We sold 2 4,730 TEU vessels with an average age of 19 years for an aggregate proceeds of $64.5 million. The remaining fleet continues to provide meaningful cash flow visibility with $194 million of contracted revenue secured across 6 vessels with an average remaining charter duration of approximately 3 years.

Overall, we have been monetizing mature assets at attractive values while building and maintaining contracted earnings and optionalities as charter market and asset values evolve. Please turn to Slide 7, where we outline our recent developments. For the second quarter, revenue was $410.2 million. EBITDA was $275.2 million. Net income was $167.9 million. Earnings per common unit were $5.78. In terms of our balance sheet, net LTV was 27.9%, half of our total debt of $1.3 billion has no LTV covenant. 43% of our total debt is fixed rate. Our debt has a staggered maturity profile with no near-term refinancing cliff. We have $1.9 billion of debt-free vessel values across 55 vessels, representing potential incremental financing capacity.

Available liquidity totaled $625 million. Contracted revenue backlog was $4.4 billion, extending through 2037. For the second half of 2026, contracted revenue exceeded projected cash operating cost by $151 million. As of August 12, 2026, Navios has 6,250 open or index-linked days in 2026, preserving participation in a stronger spot markets while maintaining a substantial contracted earnings base. Please turn to Slide 8. Navios Partners announced a new $200 million common unit repurchase authorization, double the size of our current program. We view this program as an important tool for creating value for our common unitholders, particularly when our units trade at a meaningful discount to underlying NAV.

In allocating capital to a unit repurchase program, we consider the relative attractiveness of alternative uses of capital, including the availability of investments that can enhance long-term cash flow generation, the preservation of liquidity, maintaining prudent leverage and safeguarding balance sheet strength. All of this must be considered in the context of an industry that suffers change quickly. Since the current program began in the second quarter of 2024, the company has repurchased 1.9 million common units for $92.6 million, including 135,846 units for $9.8 million in the second quarter of 2026.

During the last 12 months, we returned $46 million of capital to our unitholders, of which $6 million was cash distribution in addition to $40 million of unit repurchases. Overall, the program has created a $6.30 per unit of accretion. Common units outstanding declined by about 6% from 30.2 million before the program to 28.3 million as of August 12, 2026. Please now turn to Slide 9. 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 30% to a record high of $4.4 billion.

We have an EBITDA run rate of over $900 million and have expanded our fleet value, including our newbuilding program to $10.2 billion. Importantly, we have not sacrificed financial discipline in achieving these goals. In this process, we reduced our net loan-to-value by 38% to 27.9%. 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. Stratos Desypris, Navios Partners' Chief Operating Officer. Stratos?

Efstratios Desypris: Thank you, Angeliki, and good morning, all. Please turn to Slide 10, which details our operating free cash flow potential for the remaining 6 months of 2026. We fixed 77% of available days at a net average rate of $28,100 per day. Contracted revenue exceeds estimated total cash operating cost by $151.2 million, and we have 6,250 remaining open or index-linked days, offering meaningful upside. Moving to Slide 11. Our contracted revenue backlog provides strong earnings visibility in an uncertain market. Taking advantage of the current strong rate environment, we continue to grow contracted revenue.

In Q2 and Q3 quarter-to-date, we added approximately $666 million, $439 million from 6 tankers, $38 million from 2 dry bulk vessels and $129 million from 4 containerships. Total contracted revenue reached a record high of $4.4 billion, $2 billion for tankers, $2.1 billion for containerships and $0.3 billion for dry bulk. Charters are extended through 2037 with a diverse group of quality counterparties. Slide 12 summarizes the fleet developments for Q2 and Q3 quarter-to-date. During the period, we agreed to acquire 3 newbuilding VLCCs for $362 million with delivery expected in the second half of '28 and 2029. We also agreed to acquire one scrubber-fitted Japanese newbuilding Capesize vessel for $70 million.

The vessel is expected to be delivered in the second half of 2029. We also sold one 19-year-old 4,730 TEU containership for $34.5 million. Additionally, we took delivery of 1 newbuilding, Aframax/LR2 vessel, which is chartered out for about 5 years at a net daily rate of $27,420. We continue to actively renew our fleet to maintain a young age profile. We have 29 newbuilding vessels delivering to our fleet through 2029, representing $2.5 billion of investment. Based on our financing, both agreed and in process, we have about $290 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 $1.8 billion in contracted revenue over a 5-year average charter duration. Moving to Slide 13. Our diversified fleet provides revenue visibility and market exposure. For the year, we have 53,546 available days, of which 88% are fixed and 12% 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 24% of our dry bulk fleet is open or indexed.

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

Erifili Tsironi: Thank you, Stratos, and good morning, all. I will briefly review our unaudited financial results for the second quarter and the first half of 2026. 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 14. Total revenue for the second quarter of 2026 increased by 25% to $410 million compared to $328 million for the same period in 2025 due to higher combined time charter equivalent rate despite lower available days.

Our combined TCE rate for the second quarter of '26 increased by 24% to $28,512 per day, while our available days decreased by 2% to 13,152 days compared to Q2 2025. In terms of sector performance, our TCE rate per day was higher by 53% to $23,682 for our bulkers and by 25% to $33,159 for our tankers. Our Q2 2026 TCE rate per day for our containerships was in line with 2025 levels at $31,191 per day. EBITDA, net income and earnings per common unit for the second quarter and the first half of 2026 were adjusted as explained in the press release and in the slide footnote.

Adjusted EBITDA for Q2 2026 increased by $70 million to $242 million compared to Q2 '25. The increase was primarily driven by the increase in revenue and a $2 million decrease in vessel operating expenses due to a decrease in OpEx days. Fleet OpEx daily rate was in line with '25 levels at $7,152. Adjusted EBITDA was negatively affected by a $14 million increase in time charter and voyage expenses, primarily reflecting additional insurance premiums reimbursed by charterers. Adjusted net income for Q2 '26 increased by $71 million to $135 million. Adjusted earnings and net earnings per common unit for the second quarter of '26 were $4.65 and $5.78, respectively.

Total revenue for the first half of '26 increased by 21% to $767 million compared to $632 million for the same period in '25 due to higher combined time charter equivalent rate despite lower available days. Our combined TCE rate for the first half of '26 increased by 22% to $27,098 per day, while our available days decreased by 2% to 26,256 days compared to the first half of '25. In terms of sector performance, our TCE rate per day was higher in all 3 sectors as follows: 47% increase to $20,632 for our bulkers, 24% increase to $32,694 for our tankers and 2% increase to $31,444 for our containerships.

Adjusted EBITDA for the first half of '26 increased by $120 million to $446 million compared to the first half of '25. The increase was primarily driven by the increase in revenue and a $2 million decrease in vessel operating expenses due to a decrease in OpEx days. Fleet OpEx daily rate was 2% higher than '25 levels at $7,174. Adjusted EBITDA was negatively affected by a $15 million increase in time charter and voyage expenses, primarily reflecting additional insurance premiums reimbursed by charterers and a $3 million increase in general and administrative expenses, mainly due to higher euro-dollar exchange rate prevailing during the first half of '26.

Adjusted income for the first half of '26 increased by $121 million to $233 million. Adjusted earnings and earnings per common unit for the first half of '26 were $8.00 and $9.42, respectively. Turning to Slide 15. I will briefly discuss some key balance sheet data. As of June 30, '26, cash and cash equivalents, including restricted cash and time deposits in excess of 3 months were $469 million. In addition, we had $156 million available under 2 revolving credit facilities. During the first half of '26, we paid $190 million under our newbuilding program, net of debt, and we concluded the sale of 4 vessels for $123 million, adding about $99 million cash after debt repayment.

Long-term borrowings, including the current portion and the senior unsecured bond net of deferred fees increased by $103 million to $2.26 billion following the delivery of 5 new buildings during the first half of the year. Net debt to book capitalization improved to 30.6%. Slide 16 highlights our debt structure. At quarter end, we had 55 debt-free vessels, including 19 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 a $330 million senior unsecured bond trading in the Oslo Bors. In addition, 43% of our debt is fixed at an average interest rate of 6.3%, while 50% carries no loan-to-value covenant.

We have also partly 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 1.7%. 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 balloons due in any single year until 2030 when the bond matures. Finally, in July, we concluded the financing of 1 newbuilding Capesize vessel under a 10-year bareboat contract with purchase options with an implied financing amount of $64.6 million and a 6% fixed interest rate.

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 18. 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, reaching $602,000 per day and remain elevated with a significant portion of the fleet trapped inside the Gulf. The shortfall has been partially mitigated by increased crude volumes from U.S.A., Brazil, Venezuela, Guyana heading to both Europe and Asia adding more ton-miles. At the same time, renewed disruption in the Red Sea has led Saudi crude to alternatively being shipped via the Mediterranean to Asia.

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 Capesizes and Panamaxes and has continued to support container time charter rates. The conflict in the Ukraine and the recent Panama Canal draft reductions due to El Nino also add ton-miles for most vessel types. With negotiations between the U.S. and Iran at an impasse and the Strait of Hormuz and South Red Sea effectively closed, vessels utilization will continue to run at high levels, supporting elevated rates for the near term.

Medium-term trade adjustments will 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. Strategic and commercial crude and product reserves will need to be restocked, which should keep tanker rates elevated over the long term. However, 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 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 about 14% of the total fleet and is expected to remain low due to high newbuilding prices, uncertainty about new fuel regulations, yard availability and general market outlook. The fleet is aging quickly with 39% of the vessels 15 years old with older vessels far exceeding those on order. Supply should be constrained over the medium term. Please turn to Slide 21. 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 tons by '28. All its year-to-date shipments were about 9 million long-haul tons from 0 last year. Vale in Brazil has 3 new projects totaling 50 million tons expected to start exporting by the end of '26. Liberia adds 10 million tons of exports in '26. In total, these 180 million tons are all long-haul ton-mile trades, creating demand for an additional 249 capes. With the current order book of only 227 capes due by '28, a further tightening of supply and demand is expected over the next 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 23 for the review of the tanker industry. As to supply, we see a tanker order book of 26%. About 50% of the fleet is already over 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 24. The U.S.

Office of Foreign Assets Control, OFAC, the EU and the U.K. continue to sanction Russian and Iranian oil revenues and ships delivering their crude and product cargoes. The U.S. recently imposed sanctions on 5 Iranian-linked VLCCs and 3 product tankers, along with sanctions on several individuals and companies involving trades in Iranian cargoes or aiding payments to Iran. These tight 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 875 mostly overage tankers now sanctioned, the fleet has already seen a significant reduction of about 15.3% 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 26 for a review of the container industry. After the COVID pandemic, container ship orders were mainly for the biggest units with fleet expansions in the large vessels set to continue at high level. Currently, 72% of the order book for ships with 9,000 TEU capacity or greater and only 24% of the order book is for 2,000 to 9,000 TEU capacity where Navios is most active. Note that by '29, more than 50% of the 2,000 to 9,000 TEU fleet will be 20 years old or older.

Smaller segments of the fleets are well positioned to take advantage of the shifting trading patterns. As shown at the right-hand graph, growth in non-mainline trades far exceeds the traditional mainline trades to the U.S. and Europe due to the tariffs and higher growth in developing countries. Trades involving the Southern Hemisphere, mostly served by smaller sized vessels are expected to see continued healthy 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. This completes the formal presentation. We open the call to questions.

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

Omar Nokta: Nice update today, and thank you for the overall market commentary and company update. Clearly, I guess, as we think about things, there continues to be a good amount of uncertainty, as you highlighted, across the different markets. But freight rates are very firm across all of your segments, and you've been taking advantage of that. And I just wanted to ask about the dry bulk fleet as it is now because that seems to be really where there is the most spot exposure, call it, or at least you do have vessels on charters that are on an index-linked basis.

I just wanted to get a sense from you, as you look ahead with this fleet in particular, is the idea or the plan to continue deploying these vessels the way that they are, which is on these spot-linked charters? Or do you start to look to convert some of these on to fixed rate contracts?

Angeliki Frangou: Omar, I think this is a good observation. I mean, basically, if you see on Stratos' slide, there is -- we have about 6,250 days that are opening mainly are index is a dry bulk days. What we see is a very firm market. We have been able to fix even our very, very old cape on 2.5-year durations at healthy rates by historical standards. So you will see some contracted revenue because it's at levels that do make sense. But we also keep -- you will have part of that also on index.

So you will have seen that we added in the contracted revenue and Stratos can take you through a little bit on the recent deals we did.

Efstratios Desypris: Actually, Omar, I mean, as Angeliki said, we have about 25% of our days for the second half of this year, which are indexed on the dry bulk. And this is very important because on index, you see the strength of the spot market today, and we are able to capture that 100% basically. And on top of that, we have already fixed another 2 vessels on longer duration. It's an average of about 2 years on average. And as Angeliki pointed out, one of the vessels was a 21-year-old vessel, which we fixed for 2 years, taking out the age to 23.5. So this is indications of a very, very healthy market with good prospects.

People feel that this market is there at least for the foreseeable future.

Omar Nokta: Yes. Got it. Understood. And then maybe just one follow-up, and I'll pass it back. Obviously, nice to see the share buyback. You've nearly exhausted the original $100 million. You're commencing a new $200 million buyback you announced today. Just a really simple question. Does this new $200 million replace what's left of the $100 million? Or is the plan to finish off the remainder of the $100 million before shifting toward the new one?

Angeliki Frangou: This is on top of the remaining. So we gave visibility as we are coming to the end of our $100 million. We bought about 6% of our shares. So we are ready to position the company, doubling our buyback.

Operator: And we'll move next to Kristoffer Skeie with Arctic Securities.

Kristoffer Skeie: Congrats on another great quarter. So my question relates a bit to what Omar was touching upon. The LTV is now 27.9% as of quarter end. And I was wondering if you could give some guidance on when you expect the target to be reached? And what do you expect that will change in terms of the capital allocation? So -- and on the $200 million buyback program, is it fair to assume that we could expect more than $10 million a quarter?

Angeliki Frangou: Kristoffer, the thing -- the one thing I can tell you is that we doubled today our buyback, and we have been doing that while we are building quite significantly -- we build a lot of value for the company. And this buyback is measured by the considerations we have, which is we are renewing our fleet. We have a $4.2 billion newbuilding program, rebuilding and renewing our fleet quite significantly. And we are deleveraging at the same time, leverage today is about 27%, which is quite significantly reduced from when we started this process.

So our buyback is based on an ability to have a flexible company to be able to operate in any market condition and without creating stress in the system. So this is where we are, and we are working on toward the 20% to 25% level.

Operator: And we'll take our next question from Stephanie Moore with Jefferies.

Peter Sullivan: This is Peter Sullivan calling on behalf of Stephanie Moore. My question was centered around counterparty concentration, looking at revenue backlog standing at $4.4 billion going through 2037. How do you guys evaluate concentration risk within the backlog? Which metrics should investors focus when assessing counterparty quality and then renewal risk across all 3 subsectors? And then as your backlog has expanded, has this changed over time?

Angeliki Frangou: Peter, for us, risk is something very, very important. It's not about -- as you very well said, we have a backlog of $4.4 billion, which is quite significant and until 2037, but absolute -- the most important thing is what we collect. So the risk management is quite significant because we are in different sectors, the huge diversification between oil -- major oil companies to [ green houses ] to major container counterparties. So basically, you have a lot of different entities. And Stratos can give a little bit on concentrations.

Efstratios Desypris: I mean if you see on the presentation, Peter, you can see that the counterparties that we have are basically, I would say, blue chip counterparties. They are top of the line in say, rated names. And as Angeliki said, it's on the oil side, of course, you have oil majors and major oil players. But there is also diversification between the segments. So you're not exposed in just one segment. You see that the contracted revenue comes about 50-50 between containers and tankers. And this changes depending on the opportunities that you see in the market.

And we are always focusing on the quality of the counterparty in order to make sure that this counterparty can always perform the contract irrespective of the market conditions.

Peter Sullivan: Perfect. Very helpful. And then as a follow-up, you've spoken about a longer-term reconfiguration of global supply flows driven by geopolitical and national security considerations. As shipping routes lengthen and vessel deployment patterns kind of evolve over time, how should investors think about the balance between the benefits of higher ton mile demand and then the associated increases with operating costs such as fuel, insurance, crewing, et cetera? Then I'll pass it on.

Angeliki Frangou: Let me explain one thing. The longer ton-mile is like removing from the supply of vessels. Like I will give you an example. I mean, we thought Red Sea under the previous condition was long, taking 10 days more for the container vessels to go around the Cape of Africa. Today, the disruption that is happening with Red Sea and the Strait of Hormuz, which basically the VLCCs cannot go down, that adds via Mediterranean 2.5x -- I mean, quite significant more days. You are talking about 2.5x the voyage and Vincent has gone in depth on that. So the disruptions today add to the ton miles. So basically, we are paid for more days at sea.

Efstratios Desypris: And just to add to what Angeliki is saying, for us, the longer ton miles, the fuel cost and the voyage expenses that are associated because we are focusing mostly on time charters. For us, this is a pass-through. So basically, the rate environment that we see is benefiting operators like us that operate on longer-term duration in the time charters.

Angeliki Frangou: And the insurance cost...

Operator: [Operator Instructions] This does conclude today's question-and-answer session. I will now turn the meeting back to Angeliki for closing remarks.

Angeliki Frangou: Thank you. This completes our Q2 results. Thank you.

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.